EXHIBIT 10.4
Wire One Technologies, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
April 24, 2002
Xx. Xxxxx Xxxxx
00 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Dear Lew:
This letter, when accepted by you, shall constitute an employment
agreement between Wire One Technologies, Inc. (the "Company") and you. The
Company and you hereby agree as follows:
1. The Company hereby employs you as President and Vice Chairman for the
two-year period (herein called the "Employment Period") commencing on the date
hereof (the "Start Date"). Your responsibilities shall encompass supervision of
the Company's finance, investor relations, public relations, marketing and
business development functions. You accept such employment and agree to
diligently and faithfully perform such services as shall from time to time be
reasonably assigned to you, consistent with your position and title, by, or
pursuant to a resolution of, the Company's Board of Directors or its senior
management, and to diligently and faithfully devote your entire business time,
skill and attention to the performance of such services. You shall report to the
Company's Chairman and Chief Executive Officer.
2. (a) Your base salary compensation during the Employment Period
("Base Salary") shall be payable at the annual rate of $250,000.
(b) You shall be entitled to receive such cash bonuses as the
Company may, from time to time and in its sole discretion, determine. You shall,
in any event, be entitled to receive a cash bonus ("Formula Bonus") in the
amount of $20,000 with respect to any full calendar quarter during the
Employment Period, commencing on July 1, 2002, based upon, and payable only
upon, satisfaction of the following conditions (the "Performance Conditions"):
(i) the Company's net revenues exclusive of revenues from discontinued
operations ("Continuing Revenues") for such quarter, as reported in the
Company's filings with the Securities and Exchange Commission, are greater than
the Continuing Revenues for the corresponding quarter of the preceding calendar
year as so reported and (ii) the Company has at least $500,000 of "EBITDA" (that
is, earnings before interest, taxes, depreciation and amortization, exclusive of
non-recurring items and otherwise computed on a basis consistent with past
practice, as the Company publicly discloses that figure) from continuing
operations during such quarter (it being understood that, if the Formula Bonus
for any quarter has not been earned by you as a result of the failure of either
of the Performance Conditions to be satisfied for that quarter, such unpaid
installment shall be permanently forfeited). All determinations of satisfaction
of the Performance Condition shall be made by the Compensation Committee of the
Board of Directors in accordance with the criteria set forth in this
subparagraph (b).
(c) Subject to the provisions of this subparagraph (c), the Company
agrees to grant to you (i) on the Start Date a non-qualified stock option under
the Company's 2000 Stock Incentive Plan (the "Plan") to purchase 210,000 shares
of the Company's common stock (the "Common Stock"), at an exercise price equal
to the closing price of the common stock on the NASDAQ National Market on the
Start Date and (ii) subject to the approval by the Company's stockholders (which
approval is being solicited in connection with the Company's 2002 Annual Meeting
of Stockholders) to increase the number of shares available for issuance under
the Plan, a non-qualified stock option (collectively, with the stock option
contemplated by clause (i), the "Option") under the Plan to purchase 40,000
shares of the Company's common stock (the "Common Stock"), at an exercise price
equal to the closing price of the common stock on the NASDAQ National Market on
the date of such stockholder approval, if any. Your right to exercise the Option
shall vest as follows: 50% on the first anniversary of the Start Date and 50% on
the final day of the Employment Period.
The foregoing, as well as such other terms and conditions as the Company
may deem appropriate, shall be set forth in a definitive stock option agreement
in the Company's customary form. Your rights as an optionee shall, to the extent
not inconsistent with this agreement, be governed by the terms of such stock
option agreement and the Plan. The Company shall cause the shares of Common
Stock issuable upon the exercise of the Option to be registered on Form S-8
and/or Form S-3 (or any successor form) under the Securities Act of 1933, as
amended.
(c) You shall be entitled to (i) participate on the same basis as
the other senior executives of the Company in any health insurance, life
insurance, 401(k), profit-sharing or other employee benefit plan in effect with
respect to such senior executives, (ii) four weeks' paid vacation annually, to
be scheduled consistent with the Company's reasonable business requirements and
(iii) reimbursement of expenses reasonably incurred by you in connection with
the performance of your duties hereunder, provided that you promptly furnish
documentation therefor reasonably satisfactory to the Company. Any compensation
payable pursuant to this Agreement shall be paid in accordance with the
Company's normal payroll policy.
3. (a) In the event of your death, the Employment Period shall
automatically terminate, effective upon the date of your death. In the event
that you are unable to perform the duties required of you pursuant to this
Agreement for either one hundred twenty (120) consecutive days during the
Employment Period, or one hundred eighty (180) days in the aggregate during any
365-day period during the Employment, by reason of illness or other illness or
other physical incapacity, the Company may, after the expiration of such period,
terminate the Employment Period.
(b) In the event that there occurs a Corporate Transaction or a
Change of Control (whether or not in association with a Corporate Transaction)
(as such terms are defined in the Plan), or in the event that the Company at any
time terminates the Employment Period without Cause, your right to purchase all
shares subject to the Option shall automatically, without any further action,
accelerate (to the extent such vesting is not otherwise accelerated in
accordance with the Plan), with the "Post-Termination Exercise Period" under the
Stock Option Agreement extended to one (1) year. In addition, in the event of a
termination without Cause, you shall be entitled to receive a lump sum payment
in an amount equal to the amount of your Base Salary for the longer of (1) the
balance of the Employment Period and (2) the end of the fourth complete calendar
quarter following such termination. In the event of any termination under this
subparagraph (b), you shall not be under any obligation to attempt to mitigate
your damages
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arising from such termination, by seeking other employment or
otherwise, nor shall the Company be entitled to offset against such damages any
of your earnings from sources other than the Company following such termination.
For purposes of this agreement, "Cause" is defined as your failure to perform
services, or to comply with any of your other covenants, under this agreement,
which failure is material to this agreement and remains uncured for ten (10)
business days following your receipt of written notice thereof from the Company.
4. Except as required in connection with the performance of your services
to the Company, you shall not, during or after the termination of the Employment
Period, use or disclose to any person, partnership or corporation any
confidential business information or trade secrets of the Company obtained or
learned by you during the Employment Period. You also agree that you shall not,
for a period of one (1) year following the termination of the Employment Period,
induce any employee of the Company to terminate his or her employment with the
Company.
5. You hereby agree that all ideas, creations, improvements and other
works of authorship created, developed, written or conceived by you at any time
during the Employment Period are works for hire within the scope of your
employment and shall be the property of the Company free of any claim whatever
by you or any person claiming any rights or interests through you. You
acknowledge and agree that nothing contained herein shall require the Company to
utilize your services, the Company's only obligation to you being payment of the
compensation to which you are entitled under paragraph 2 and 3 above.
6. You hereby agree to indemnify and hold the Company harmless from and
against any and all loss, damage, cost and expense, including reasonable
attorneys' fees, incurred by the Company as a result of, arising out of or in
connection with a violation of any term or condition of this Agreement required
to be performed or observed by you. The Company hereby agrees to indemnify and
hold you harmless from and against any and all loss, damage, liability, cost and
expense, including reasonable attorneys' fees, incurred by you as a result of,
arising out of or in connection with (i) a violation of any term or condition of
this Agreement required to be performed or observed by the Company or (ii) your
performance of your services in accordance with this agreement.
7. This agreement shall be governed by, and construed in accordance with,
the laws of the State of New Jersey and constitutes the entire agreement, and
shall supersede any prior agreement, between the parties hereto on the subject
matter hereof (it being understood that this Agreement supersedes the consulting
agreement date September 21, 2001, between the Company and you, with the
exception that you shall retain the stock option that was granted to you
thereunder). No waiver or modification of the terms or conditions hereof shall
be valid unless in writing signed by the party to be charged and only to the
extent therein set forth. This agreement
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shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, administrators and executors.
Yours very truly,
WIRE ONE TECHNOLOGIES, INC.
By: /s/
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/s/
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Xxxxx Xxxxx
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