EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of the 18th
day of September, 2002 between MPOWER COMMUNICATIONS CORP., a Nevada corporation
(the "COMPANY"), and Xxxxxxx X. Xxxxxxxxx ("Executive"). Capitalized terms that
are not defined within the text of this Agreement are defined in Section 6
hereof, except as otherwise indicated.
WHEREAS, Executive has been employed by the Company since January,
2000;
WHEREAS, the Company has determined that it is in its best interests
that Executive's employment with the Company continue and Executive desires to
continue his employment with the Company pursuant to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the promises and the covenants
and agreements herein contained, the parties hereto agree as follows:
1. EMPLOYMENT TERM. Subject to earlier termination in accordance
with the provisions of this Agreement, the Agreement shall become effective as
of the date hereof (the "EFFECTIVE DATE") and the term of Executive's employment
with the Company pursuant to this Agreement (the "TERM") shall end on September
18, 2003; provided, however, that the Term shall automatically be extended for
an additional one-year period on September 18, 2003 (the "EXTENSION DATE")
unless at least 60 days prior to the Extension Date, either party shall give
notice to the other in accordance with Section 7 of this Agreement of a desire
not to extend the Term.
2. DUTIES; RESPONSIBILITIES. Executive shall be employed by the
Company as Senior Vice President and General Counsel and shall report solely and
directly to the Company's Chief Executive Officer (the "CEO"). The duties and
responsibilities of Executive shall be commensurate with those duties and
responsibilities that are customarily assigned to such positions, as may be
designated from time to time by the CEO. During the Term, Executive shall devote
his full business time, attention and energies to the positions of Senior Vice
President and General Counsel of the Company; provided, however, that Executive
may devote reasonable amounts of time to (i) passive personal investments and
(ii) charitable activities so long as such activities do not interfere with his
performance pursuant to this Agreement. Executive's principal place of
employment shall be the Company's headquarters in Rochester, New York, however
Executive acknowledges that he may be required to travel in connection with his
employment.
3. COMPENSATION AND BENEFITS.
3.01 FIXED SALARY. During the Term, as compensation for Executive's
services, the Company shall pay Executive a salary at the rate of $200,000 per
annum (the "FIXED SALARY") in equal bi-weekly installments less appropriate
payroll deductions as required by law. The Fixed Salary shall be reviewed at
least annually by the CEO or such other persons as appointed by the CEO and may
be increased, but not decreased as a result of such review.
3.02 ANNUAL BONUS. During the Term, Executive shall be eligible to
receive an annual bonus (the "ANNUAL BONUS") of up to 50% of the Fixed Salary,
contingent upon achieving established goals determined by the Company in
accordance with its customary procedures and standards.
3.03 EXPENSES. The Company shall pay or reimburse Executive for all
reasonable business expenses incurred in the performance of Executive's duties
and which are consistent with the Company's policies, practices and procedures,
upon submission of appropriate vouchers and other supporting data.
3.04 STOCK OPTIONS.
(a) Not later than September 18, 2002 (the "GRANT DATE"), Executive
shall be granted stock options to purchase 100,000 shares of the Company's
common stock (the "NEW OPTIONS"). Such New Options shall (i) have an exercise
price equal to $.22 per share, (ii) vest in three (3) equal installments on each
of the first three anniversaries of the Grant Date, (iii) have a term (the
"TERM") of (10) years from the Grant Date, (iv) remain exercisable, to the
extent vested on the Termination Date, for five (5) years after the termination
of Executive's employment with the Company for any reason, but in no event after
the expiration of the Term, and (v) be non-qualified options within the meaning
of the Internal Revenue Code.
(b) All of Executive's unexercised stock options as of the Effective
Date, other than the New Options (the "EXISTING OPTIONS") shall be amended so
that they remain exercisable, to the extent vested on the Termination Date, for
five (5) years after the termination of Executive's employment with the Company
for any reason, but in no event later than 10 years after the date they were
granted.
3.05 BENEFITS. Executive and his eligible dependents shall be
entitled to participate in all general pension, profit-sharing, life, medical,
disability and other insurance, welfare and fringe benefit plans in effect for
similarly situated executives of the Company.
3.06 PAID TIME OFF. As set forth in Appendix B, attached hereto and
incorporated herein by reference, Executive shall not be entitled to receive
paid time off in accordance with the Company's paid time off policy; provided,
however, Executive has the liberty and ability to take time off on a reasonable
- as needed - basis, and is not required to record or track such time off.
4. TERMINATION OF EMPLOYMENT. Subject to the terms of this Section
4, the Company may terminate Executive's employment under this Agreement at any
time and for any reason.
4.01 TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. In the
event that Executive's employment is terminated by the Company for Cause or
Executive resigns without Good Reason, Executive shall receive the following:
(i) accrued and unpaid Fixed Salary through the Termination Date and
reimbursement for any outstanding business expenses; and (ii) such other accrued
compensation and benefits (including post-
2
retirement benefits) as may be due under the terms of the compensation and
benefit plans in which Executive participates.
4.02 TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In the
event that (A) the Company terminates Executive's employment hereunder without
Cause, (B) Executive resigns for Good Reason or (C) the Company fails to extend
the Agreement for at least one additional one-year period pursuant to Section 1,
Executive shall be entitled to the following: (i) the payments and benefits set
forth in Section 4.01 hereto and (ii) a severance benefit (the "SEVERANCE
BENEFIT") equal to two (2) times (a) the Fixed Salary immediately preceding the
Termination Date and (b) the "HIGHEST BONUS", where the Highest Bonus equals the
greater of the Annual Bonus paid by the Company to Executive (x) during the
twelve (12) month period immediately preceding the Termination Date, or (y)
during the twelve (12) month period immediately preceding the Effective Date.
Payment of the Severance Benefit shall be contingent upon Executive's execution
of a waiver and release of claims (a "RELEASE") in favor of the Company and its
affiliates and their respective employees and agents, substantially in the form
set forth in Appendix A. The Severance Benefit shall be paid by the Company in a
lump-sum, no later than two (2) business days after the expiration of the
Revocation Period, as defined in the Release.
4.03 TERMINATION DUE TO DEATH OR DISABILITY. In the event of
Executive's death or Disability, the Fixed Salary shall continue to be paid to
Executive or his estate, as the case may be, for a period beginning on the
Termination Date ending on the earlier of (i) the end of the Term and (ii) the
first anniversary of the Termination Date. Neither Executive, nor his estate, as
the case may be, shall be entitled to continue to receive any benefits other
than the Fixed Salary, proceeds from insurance per the terms of any applicable
policy and reimbursement of expenses. In addition, all further vesting of
options shall cease on the Termination Date.
4.04 NO OTHER PAYMENTS OR BENEFITS. As of the Termination Date,
other than the payments and benefits expressly provided for or referred to in
this Section 4, all obligations of the Company to Executive, other than as
required by law or provided under any applicable employee benefit plan of the
Company, shall cease.
4.05 NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive during the Term shall be communicated
by a Notice of Termination to the other party hereto. The Notice of Termination
shall, if applicable, indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
4.06 BREACH OF RESTRICTIVE COVENANTS. If, at any time Executive
breaches any of the provisions of Sections 5.01, 5.02, 5.03 and/or 5.05 below,
he shall not be eligible, as of the date of such breach, for any severance
benefits described in this Section 4 and all obligations of the Company to pay
any such severance benefits hereunder shall thereupon cease.
3
5. RESTRICTIVE COVENANTS.
5.01 CONFIDENTIALITY; NONDISCLOSURE. Executive understands and
acknowledges that in the course of Executive's employment, he has had and will
continue to have access to and will learn information proprietary to the Company
and its subsidiaries affiliates (the "COMPANY GROUP") that concerns the
technological innovations, operation and methodology of the Company Group,
including, without limitation, business plans, financial information, protocols,
proposals, manuals, procedures and guidelines, computer source codes, programs,
software, know-how and specifications, copyrights, trade secrets, market
information, Developments (as hereinafter defined), data and customer
information (collectively, "PROPRIETARY INFORMATION"). Executive agrees that
during the period beginning on the date of his hiring and continuing in
perpetuity thereafter, Executive shall keep confidential and shall not disclose
any such Proprietary Information to any third party, except as required to
fulfill his duties in connection with his employment by the Company, and shall
not misuse, misappropriate or exploit such Proprietary Information in any way.
The restrictions contained herein shall not apply to any information which
Executive can demonstrate (i) was already available to the public at the time of
disclosure, or subsequently became available to the public, otherwise than by
breach of this Agreement or (ii) was the subject of a court order to disclose.
Upon any termination of Executive's employment, Executive will immediately
return to the Company all Proprietary Information and copies thereof in
Executive's possession.
"DEVELOPMENTS" shall mean all data, discoveries, findings, reports,
designs, inventions, improvements, methods, practices, techniques, developments,
programs, concepts and ideas, whether or not patentable, relating to the present
or planned activities, or the products and services of the Company.
5.02 NO COMPETING EMPLOYMENT. Executive hereby acknowledges that in
the course of Executive's employment with the Company, Executive has become
familiar, and will become familiar, with the trade secrets of the Company Group
and with other confidential information concerning the Company Group, and that
Executive's services have been and will be of special, unique and extraordinary
value to the Company Group. Therefore, Executive hereby agrees that for the
duration of the Restricted Period, Executive shall not, unless Executive
receives the prior written consent of the Board of Directors of the Company (the
"BOARD"), directly or indirectly, knowingly own an interest in, manage, operate,
join, control, lend money or render financial or other assistance to or
participate in or be connected with, as an officer, employee, partner,
stockholder, consultant or otherwise, any individual, partnership, firm,
corporation or other business organization or entity that competes with the
business of the Company as such businesses exist or are in the process of being
formed or acquired as of the Termination Date, within any geographical area in
which the Company is engaged, services customers, or was actively planning to
engage during the Term or as of the Termination Date; provided, however, that
this Section 5.02 shall not proscribe Executive's ownership, either directly or
indirectly, of less than one percent of any class of securities which are listed
on a national securities exchange or quoted on the automated quotation system of
the National Association of Securities Dealers, Inc.
4
5.03 RESTRICTIONS ON SOLICITATION. During the Restricted Period and
except as required pursuant to Executive's duties to the Company in connection
with the employment relationship, Executive will not, directly or indirectly:
(i) solicit or contact any customer of the Company Group (or any other entity
that Executive knows is a potential customer with respect to specific products
of the Company Group and with which Executive have had contact during the period
of Executive's employment with the Company Group) for any commercial pursuit
that to Executive's knowledge is in competition with the Company, or that to
Executive's knowledge is contemplated from time to time during the period of
Executive's employment with the Company by the Company's business plan; (ii)
take away or interfere or attempt to interfere with any custom, trade, business,
patronage or other business relation of the Company, or induce, or attempt to
induce, any employees, agents or consultants of or to the Company Group to do
anything from which Executive is restricted by reason of this Section 5; or
(iii) induce or aid others to induce employees, agents or consultants of the
Company Group to terminate their employment with the Company Group, or interfere
or attempt to interfere with any employees, agents or consultants of the Company
Group.
5.04 EXTENSION OF RESTRICTED PERIOD. The Restricted Period shall be
extended by the length of any period during which Executive is in breach of any
of the terms of Section 5 hereof.
5.05 ASSIGNMENT OF DEVELOPMENTS. During the Term, all Developments
that are at any time made, conceived or suggested by Executive, whether acting
alone or in conjunction with others, shall be the sole and absolute property of
the Company, free of any reserved or other rights of any kind on Executive's
part. During the Term, if such Developments were made, conceived or suggested by
Executive during or as a result of Executive's employment relationship with the
Company, thereafter, Executive shall promptly make full disclosure of any such
Developments to the Company and, at the Company's cost and expense, do all acts
and things (including, among others, the execution and delivery under oath of
patent and copyright applications and instruments of assignment) deemed by the
Company to be necessary or desirable at any time in order to effect the full
assignment to the Company, or of Executive's right and title, if any, to such
Developments. Executive acknowledges and agrees that any invention, concept,
design or discovery that concretely relates to or is associated with Executive's
work for the Company that is described in a patent application or is disclosed
to a third party directly or indirectly by Executive during the Restricted
Period shall be the property of and owned by the Company and such disclosure by
patent application or otherwise shall constitute a breach of Section 5.01 above.
5.06 APPLICATION OF COVENANTS. The activities described in this
Section 5 shall be prohibited regardless of whether undertaken by Executive in
an individual or representative capacity, and regardless of whether performed
for Executive's own account or for the account of any other individual,
partnership, firm, corporation or other business organization (other than the
Company Group).
5.07 INJUNCTIVE RELIEF. Without limiting the remedies available to
the Company, Executive acknowledges that a breach of any of the covenants
contained in this
5
Section 5 may result in material irreparable injury to the Company for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to seek a temporary restraining
order or a preliminary or permanent injunction restraining Executive from
engaging in activities prohibited by this Section 5 or such other relief as may
be required to specifically enforce any of the covenants in this Section 5.
5.08 REASONABLENESS OF COVENANTS. If, at the time of enforcement of
the covenants set forth in this Section 5, a court holds that the restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum period, scope or geographical area reasonable
under such circumstances shall be substituted for the stated period, scope or
area.
5.09 VIOLATION AND REMEDY. If the Company reasonably determines that
Executive has breached any of the provisions of this Section 5, in addition to
any other remedies available to the Company in law or equity, the Company shall
be entitled to immediately suspend as of the date of such breach the provision
to Executive of any payments or benefits under this Agreement, including without
limitation, the Severance Benefit outlined in Section 4 of this Agreement, and
any Severance Benefits already paid shall be immediately returned to the
Company. In addition, should the Company breach any of its obligations under
this Agreement, including without limitation, the Severance Benefit outlined in
Section 4, Executive will not be bound by the provisions of Sections 5.02 and
5.03.
6. DEFINITIONS.
"CAUSE" shall mean the occurrence of any of the following events:
(i) Executive's willful material violation of any law or regulation applicable
to the business of the Company; (ii) Executive's conviction of, or plea of "no
contest" to, a felony; (iii) any willful perpetration by Executive of an act
involving moral turpitude or common law fraud whether or not related to
Executive's activities on behalf of the Company; (iv) any act of gross
negligence by Executive in the performance of Executive's duties as an employee;
(v) any violation of the "Standards of Conduct" set forth in the Company's
employee manual, as in effect from time to time; or (vi) any willful misconduct
by Executive that is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company.
"DISABILITY" shall have the meaning set forth in the Company's
long-term disability plan applicable to Executive.
"GOOD REASON" shall mean the occurrence of any of the following
events: (i) a material adverse change in Executive's title or duties in effect
on the Effective Date; (ii) a material reduction in Executive's Fixed Salary or
Annual Bonus opportunity in effect on the Effective Date; and (iii) the
relocation of Executive's principal place of business to a location that is more
than 35 miles from his principal place of business on the Effective Date.
6
"NOTICE OF TERMINATION" shall mean the notice provided in the event
of any termination of Executive's employment by the Company or resignation by
Executive during the Term which shall be communicated to the other party hereto.
"RESTRICTED PERIOD" shall mean: (i) the period during which
Executive is employed with the Company; and (ii) following a termination of
Executive's employment with the Company for any reason, the period beginning on
the Termination Date and ending on the first anniversary of the Termination
Date.
"TERMINATION DATE" shall be determined as follows: (i) if
Executive's employment is terminated for Disability, sixty days after a Notice
of Termination is given (provided that Executive shall not have returned to the
full-time performance of his duties during such sixty-day period); (ii) if
Executive's employment is terminated by the Company without Cause, the date
specified in the Notice of Termination, which date shall be no earlier than 30
days after the date such notice is delivered to Executive, as the case may be
(or if no date is specified in the Notice of Termination, sixty days after the
Notice of Termination is received by the Company or delivered to Executive, as
the case may be); (iii) if Executive's employment is terminated by the Company
for Cause, the date specified in the Notice of Termination; (iv) in the event of
Executive's resignation of employment, the Termination Date shall be the date
set forth in the Notice of Termination, which date shall be no earlier than
thirty days after the date such notice is received by the Company; or (v) the
Termination Date in the event of Executive's death shall be the date of
Executive's death.
7. NOTICES. All notices under this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered against receipt
or if mailed by registered or certified mail, return receipt requested,
addressed to the Company and to Executive, at the address indicated below or to
such other person or address as may be designated by like notice hereunder. Any
such notice shall be deemed to have been given on the day delivered, if
personally delivered, or on the third business day after the date of mailing, if
mailed.
To the Company:
Mpower Communications Corp.
000 Xxxxx'x Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
To Executive:
Xxxxxxx X. Xxxxxxxxx
[Address]
8. DISPUTE RESOLUTION PROCESS. Any future dispute, controversy or
claim between the parties arising from or relating to this Agreement, its breach
or any matter
7
addressed by the Agreement shall be resolved through binding confidential
arbitration in Rochester, New York, to be conducted by an arbitrator that is
mutually agreeable to both Executive and the Company, all in accordance with the
rules of the American Arbitration Association then in effect. If Executive and
the Company cannot agree upon an arbitrator, the arbitration shall be settled
before a panel of three arbitrators, one to be selected by the Company, one by
Executive and the other by the two persons so selected, all in accordance with
the rules of the American Arbitration Association then in effect. Judgment upon
the award rendered by the arbitrator(s) may be entered by any court having
jurisdiction over the matter. Costs and fees of the arbitration will be divided
equitably by the arbitrator between both parties; provided, however, that, in
the event that either party prevails over the other party in connection with an
arbitration arising out of a breach of this Agreement, the non-prevailing party
shall be liable for all reasonable attorney's fees and expenses incurred in
connection with any action for damages or the enforcement of any provision of
this Agreement brought by the other party.
9. MISCELLANEOUS.
9.01 NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Agreement nor
any of the rights or benefits evidenced hereby shall confer upon Executive any
right to continuance of employment by the Company or interfere in any way with
the right of the Company to terminate Executive's employment, subject to the
provisions of Section 4 above, for any reason, with or without Cause.
9.02 EXECUTIVE'S REPRESENTATION. Executive hereby represents and
warrants to the Company that the execution and delivery by Executive of this
Agreement to the Company will not breach the terms of any contract, agreement or
understanding to which Executive is party. Executive further acknowledges and
agrees that a breach of this representation by Executive shall render this
Agreement void ab initio and of no further force and effect.
9.03 SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and, in the case of the Company,
business successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise), but no other person shall acquire or have any
rights under or by virtue of this Agreement, and the obligations of Executive
under this Agreement may not be assigned or delegated.
9.04 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 provision had never been contained herein.
8
9.05 WITHHOLDING. Amounts paid to Executive's hereunder shall be
subject to all applicable federal, state and local tax withholdings.
9.06 HEADINGS. The headings contained in this Agreement are intended
solely for convenience of reference and shall not affect the rights of the
parties to this Agreement.
9.07 SURVIVAL. All of the provisions and restrictions set forth in
Section 5 shall survive and continue in full force in accordance with their
terms notwithstanding any termination of the Term.
9.08 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
9.09 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws and decisions of the State of
New York applicable to contracts made and to be performed therein without giving
effect to the principles of conflict of laws.
9.10 ENTIRE AGREEMENT; MODIFICATION; WAIVER; INTERPRETATION. This
Agreement contains the entire agreement and understanding between the parties
with respect to the subject matter hereof and supersedes all prior negotiations
and oral understandings concerning the subject matter hereof; provided, however,
that, (1) the Indemnity Agreement dated September 20, 2002, attached hereto as
Appendix C and incorporated herein by reference, and (2) Section 2 (entitled
"Retention Bonus") of the Retention and Severance Agreement dated October 11,
2001, attached hereto as Appendix D and incorporated herein by reference, shall
be enforceable and binding on the parties. This Agreement supercedes the
remaining terms and conditions of said Retention and Severance Agreement;
provided, however, that it is the intention of the parties hereto that if this
Agreement is void, becomes voidable, or otherwise is or becomes unenforceable as
drafted, then the Retention and Severance Agreement shall continue in full force
and effect, in accordance with the terms and conditions thereof immediately
prior to the execution of this Agreement. Neither this Agreement nor any of its
provisions may be modified, amended, waived, discharged or terminated, in whole
or in part, except in writing signed by the party to be charged. No waiver of
any such provision or any breach of or default under this Agreement shall be
deemed or shall constitute a waiver of any other provision, breach or default.
All pronouns and words used in this Agreement shall be read in the appropriate
number and gender, the masculine, feminine and neuter shall be interpreted
interchangeably and the singular shall include the plural and vice versa, as the
circumstances may require.
9
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
MPOWER COMMUNICATIONS CORP.
By: /s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx
Chairman and CEO
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxxx
10
