Exhibit 10.17
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), effective as of the
16th day of November, 2000 (the "Effective Date"), between Prodigy
Communications Limited Partnership, a Delaware limited partnership (the
"Company"), with its principal place of business at 0000 Xxxxx Xxxxx Xxxx.,
Xxxx. XXX, Xxxxxx, Xxxxx 00000, and Xxxxxxx X. Xxxxxx, residing at 0000
Xxxxxxxx Xxxx, Xxxxxx, XX 00000 (the "Executive").
WHEREAS, the Company desires to employ the Executive as
Senior Vice President Human Resources and Administrative Operations, and the
Executive desires to be employed in that capacity with the Company, pursuant to
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. TERM OF AGREEMENT.
The terms and conditions of this Agreement shall commence on
the Effective Date and terminate on November 15, 2003, unless sooner terminated
in accordance with the provisions of Section 4 herein (the "Agreement Period").
This Agreement does not alter the at-will relationship, in that the Company
retains the right to terminate this Agreement and the Executive's employment
with the Company, with or without cause, as set forth in Section 4 herein.
2. TITLE AND CAPACITY.
The Executive shall serve as Senior Vice President, Human
Resources and Administrative Operations, of the Company. The Executive shall
report to, and be subject to the supervision of, the Company's Chief Executive
Officer. The Executive shall have such authority as is delegated to him by the
Chief Executive Officer. The Executive shall be based in the general
metropolitan area of Austin, Texas.
The Executive hereby accepts such employment and agrees to
undertake the duties and responsibilities inherent in such position, and such
other duties and responsibilities as the Chief Executive Officer shall from
time to time assign to the Executive. During the term hereof, the Executive
shall devote Executive's entire business time, his best efforts, attention and
energies to the business and interests of the Company. The Executive shall
abide by the rules, regulations, instructions, personnel practices and policies
of the Company and any changes therein which may be adopted from time to time
by the Company, in its sole discretion.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Executive, in accordance
with its normal payroll practices, a base salary of $7291.67
bi-monthly (which annualizes to $175,000.00) commencing on the
November 16, 2000. Based on performance, such salary may be
subject to increase consistent with existing merit increase
guidelines.
3.2 PERFORMANCE BONUSES. The Executive shall be eligible to
participate in an annual bonus plan. The target for 100%
successful completion of established objectives is 40% of his
annual base salary as a performance bonus during each calendar
year of the Agreement Period. During each such year, 50% of
such bonus shall be contingent upon the successful completion
of personal performance goals as mutually agreed between the
Executive and the Chief Executive Officer, and 50% of such
bonus shall be contingent upon the successful completion of
corporate goals as determined by the Company. The amount of
the performance bonus, if any, shall be determined and paid
according to normal Company procedure, but not later than 90
days after the end of each such calendar year during the
Agreement Period.
3.3 FRINGE BENEFITS. The Executive shall be entitled to
participate in all fringe benefit programs that the Company
establishes and makes available to its employees from time to
time to the extent that Executive's position, tenure, salary,
health and other qualifications make him eligible to
participate.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for all reasonable travel, entertainment and other
expenses incurred or paid by the Executive in connection with
the performance of his duties hereunder, upon presentation by
the Executive of documentation, expense statements, vouchers
and/or such other supporting information as the Company may
request; provided, however, that the nature and amount of such
expenses shall be subject to the Company's expense
reimbursement policies then in effect.
3.5 STOCK PURCHASE OPTION.
(a) The Executive has previously been granted certain
options to purchase shares of common stock of the general
partner of the Company, Prodigy Communications Corporation
(hereinafter "General Partner") pursuant to the terms and
conditions set forth in the employee stock purchase plan in
effect on the date of the grant thereof. Such options shall
continue to be
2
governed by the terms and conditions under which they were
originally granted.
(b) During the Agreement Period, the Company will
consider on an annual basis, and in its sole discretion, the
grant of additional stock options to Executive, including any
grants in 2001.
(c) All options previously granted to Executive, or
subsequently granted hereunder, shall immediately vest should
the Company be subject to a substantial change of control, at
the expiration of this contract, or upon termination of this
Agreement as set forth in section 4.3 and section 4.5 herein.
Executive shall have 24 months from the substantial change of
control, contract expiration or termination in which to
exercise such options. This provision will supercede any
conflicting provision to the contrary in the specific option
grant.
4. TERMINATION
This Agreement, and the employment of the Executive pursuant
to this Agreement, shall terminate upon the occurrence of any
of the following:
4.1 At the election of the Company for Cause (as hereinafter
defined), immediately upon written notice by the Company to
the Executive. For purposes of this Agreement, "Cause" shall
mean:
(a) the failure of the Executive to perform his
reasonably assigned duties in a satisfactory manner, after
notice and a reasonable opportunity to correct;
(b) Executive's dishonesty, gross or repeated
negligence, or gross or repeated misconduct; or
(c) the conviction of the Executive of, or the entry
of a plea of guilty or nolo contendere by the Executive to,
any felony;
4.2 Thirty days after the death or Disability (as hereinafter
defined) of the Executive. For purposes of this Agreement,
"Disability" shall mean the inability of the Executive, due to
a physical or mental disability, for a period of more than 12
weeks, whether or not consecutive, during any 360-day period
to perform, with or without reasonable accommodation, the
essential services contemplated under this Agreement. A
determination of Disability shall be made by a physician
satisfactory to both the Executive and
3
the Company; PROVIDED THAT if the Executive and the Company do
not agree on a physician, the Executive and the Company shall
each select a physician and these two together shall select a
third physician, whose determination as to Disability shall
be binding on all parties. Nothing contained herein is
intended, or shall be interpreted, to limit the parties'
rights and responsibilities pursuant to the Family and
Medical Leave Act and/or the Americans with Disabilities Act,
if applicable. This Agreement may be modified by a court, if
necessary, to meet the minimum requirements of the law;
4.3 At the election of the Executive, upon 30 days written
notice of termination, for Good Reason. For purposes of this
Agreement only, "Good Reason" shall mean:
(a) any significant diminution in the duties of the
Executive under this Agreement, which includes reporting to
anyone other than the Chief Executive Officer;
(b) the Company's requirement that the Executive
relocate outside of the general metropolitan area of Austin,
Texas; or,
(c) substantial change of control of the Company, or
if the shares of the General Partner are no longer publicly
traded; provided, however, that Executive must provide notice
of termination hereunder within 90 days of the alleged
substantial change of control in order for his resignation to
qualify as termination for "Good Reason." Otherwise, such
resignation shall be governed by the provisions of Section 4.4
herein and related provisions;
4.4 At the election of the Executive for any reason other than
Good Reason, upon not less than 30 days prior written notice
of termination;
4.5 At the election of the Company, for any reason other than
Cause, upon 30 days written notice of termination; or
4.6 Upon the expiration of the Agreement Period, without
further action or notice by either party.
5. EFFECT OF TERMINATION.
5.1 TERMINATION PURSUANT TO SECTION 4.1 OR SECTION 4.4 HEREIN.
In the event the Executive's employment is terminated, by
either party, pursuant to Section 4.1 or Section 4.4 herein,
the Company
4
shall, through the last day of his actual employment by the
Company, continue to pay to the Executive his base salary as
in effect on the date of notice of termination and continue
to provide to the Executive, through his last day of actual
employment, the fringe benefits available to his under
Section 3.3 hereof. Upon receipt of notice of termination by
the Company or the Executive, the Company may, in its sole
discretion, immediately terminate the active duties of the
Executive and, in such case, the "last day of actual
employment" shall mean the 30th day following receipt of such
notice. Otherwise, the "last day of actual employment" shall
mean the last day that the Executive performs services for
the Company as set out herein.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Executive's
employment is terminated due to death or Disability pursuant
to Section 4.2, the Company shall continue to pay to the
estate of the Executive or to the Executive, as applicable,
for a period of six (6) months after termination of employment
due to death or Disability, the Executive's base salary as in
effect on the date of termination, and the Executive's bonus,
prorated to the last day of actual employment.
5.3 TERMINATION PURSUANT TO SECTION 4.3 OR SECTION 4.5 HEREIN.
(a) If the Executive's employment is terminated
pursuant to Section 4.3 or Section 4.5 herein, the Company
shall:
(i) continue to pay to the Executive his
base salary as in effect on the date of notice of termination
and continue to provide to the Executive the fringe benefits
available to him under Section 3.3 hereof until the last day
of actual employment;
(ii) pay to Executive a portion of the
performance bonus to which he would otherwise be entitled
under Section 3.2, prorated to the last day of actual
employment. Such prorated bonus, if any, shall be paid within
45 days after the last day of actual employment;
(iii) continue to pay to Executive, for a
period of six (6) months following the last day of actual
employment, his base salary as in effect on the date of notice
of termination; and
(iv) continue to provide to Executive, for a
period of six (6) months following the last day of actual
employment, health insurance benefits, in effect on the date
of notice of termination.
5
(b) Upon receipt of notice of termination, by
Executive or Company, pursuant to Section 4.3 or Section 4.5,
the Company may, in its sole discretion, immediately terminate
the active duties of the Executive and, in such case, the
"last day of actual employment" shall mean the 30th day
following receipt of such notice. Otherwise, the "last day of
actual employment" shall mean the last day that the Executive
performs services for the Company as set out herein.
5.4 TERMINATION AT EXPIRATION OF AGREEMENT. This Agreement
shall expire on November 15, 2003, without further action or
notice by either party, with the Company's sole obligation
being the payment of the Executive's base salary, pro-rata
bonus and fringe benefits, then in effect, until the last date
of actual employment. Upon the expiration of this Agreement,
the parties may renew the Agreement, or enter into a new
agreement, upon the mutual written consent of both parties.
5.5 CONDITION OF PAYMENT. Any payment to Executive allowed or
provided in this Section 5 and its subsections, except for
payment of salary and fringe benefits earned and accrued as of
the last date of actual employment, is conditioned upon:
(a) the Executive's compliance with the terms and
conditions contained in this Agreement, specifically, but not
limited to, those terms and conditions set out in Sections 6
and 7; and
(b) the execution by Executive, at the Company's
request, of a release of all claims against the Company, its
officers, directors, subsidiaries, parent company(ies) and
affiliates, in the form provided by the Company.
6. NON-COMPETE.
The Executive is employed hereunder as the Senior Vice
President - Human Resources and Administrative Operations. As consideration for
executing this Agreement, the Company shall provide to the Executive certain
additional confidential and Proprietary Information (as this term is defined in
Section 7 below) and training, to enable the Executive to function in this
capacity. Executive is responsible for, among other things, building and
maintaining business relationships and goodwill with current and future
customers, clients, employees and prospects. Executive acknowledges and agrees
that this responsibility creates a special relationship of trust between the
Company, the Executive, and these persons or entities, and that this
relationship creates a high risk and opportunity for the Executive to misuse
6
Proprietary Information. In light of the foregoing, and in order to protect the
legitimate business interests of the Company, the following agreement not to
compete shall apply:
(a) During the Executive's active employment and for a period of six
months following the Executive's termination of employment, the Executive will
not:
(i) be a partner, stockholder (other than as the holder of not
more than one percent (1%) of the total outstanding stock of), officer,
employee, consultant, director, joint venture, investor or lender of or
to America Online, Inc., Microsoft Network, A T & T WorldNet, EarthLink
Network, Inc., or any corporation or other entity acquiring any of the
foregoing or involved in providing Internet Access services or Small
Business Solutions that compete directly with Prodigy; or
(ii) directly or indirectly recruit, solicit or induce, or
attempt to induce, any employee or employees of the Company to
terminate their employment with, or otherwise cease their relationship
with the Company; or
(iii) directly or indirectly solicit, divert or take away, or
attempt to divert or to take away, the business or patronage of any of
the clients, customers or accounts of the Company, including but not
limited to those clients, customers or accounts which were contacted,
solicited or served by the Executive while employed by the Company.
(b) ENFORCEMENT AND DAMAGES. Breach of this covenant not to compete
will cause immediate, substantial and irrevocable harm to the Company.
Therefore, the Company is entitled to seek specific performance or injunctive
relief in order to enforce this covenant not to compete. In addition to specific
enforcement and/or injunctive relief, should Executive breach this covenant not
to compete, he agrees to pay Company liquidated damages of two times (2x) the
revenue or income the Executive receives from activities found to violate this
covenant. Executive acknowledges and agrees that legal, or monetary, damages
stemming from any breach of this covenant not to compete may be difficult to
ascertain with certainty, and that the liquidated damages set out herein are a
fair estimate of actual damages and not intended as a penalty.
(c) Unless the context otherwise requires, all references in this
Section 6 and in Section 7 below to the "Company" shall include all current or
future subsidiaries, affiliates and parent company(ies) of the Company.
(d) ACKNOWLEDGMENT. Executive acknowledges that the additional
confidential and Proprietary Information and training provided to Executive
pursuant to this Agreement gives rise to the Company's interest in restraining
Executive from competing with the Company, that this covenant not to compete is
7
designed to enforce such considerations, and that any limitations as to time,
geographic scope, and the scope of activity to be restrained, as defined herein,
are reasonable and do not impose a greater restraint than is necessary to
protect the legitimate business interests of the Company. The Executive further
acknowledges and agrees that if, at some later date, a court of competent
jurisdiction determines that this Agreement does not meet the criteria set forth
in TEX. BUS. & COM. CODE Section 15.50(2), this Agreement shall be reformed by
the court, pursuant to TEX. BUS. & COM. CODE Section 15.51(c), by the least
extent necessary to make it enforceable.
7. PROPRIETARY INFORMATION AND DEVELOPMENTS.
7.1 Proprietary Information.
(a) The Executive agrees that all information and
know-how related to the activities of the Company, whether or
not in writing, of a private, secret or confidential nature
concerning the Company's business or financial affairs
(collectively, "Proprietary Information") is and shall be the
exclusive property of the Company. By way of illustration,
but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques,
formulas, compositions, compounds, projects, developments,
plans, research data, clinical data, financial data,
personnel data, computer programs, and customer and supplier
lists. The Executive will not disclose any Proprietary
Information to others outside the Company or use the same for
any unauthorized purposes, without the prior written approval
by an officer of the Company, either during or after his
employment, unless and until such Proprietary information has
become public knowledge without fault by the Executive.
Should the Company authorize the release of Proprietary
Information to parties outside the Company, it may, in its
sole discretion, require that the Executive obtain written
assurances from such third-party(ies) to respect and maintain
the confidentiality of such information.
(b) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory
notebooks, program listings, or other written, photographic,
or other tangible material containing Proprietary Information,
whether created by the Executive or others, which shall come
into his custody or possession, shall be and are the exclusive
property of the Company to be used by the Executive only in
the performance of his duties for the Company, and may not be
used in a manner detrimental to the Company or its interests.
Executive shall not release Proprietary Information to other
employees of the Company unless
8
such employees are authorized to receive such Proprietary
Information, and then such release shall be on a "need to
know" basis only.
(c) The Executive agrees that his obligation not to disclose
or use information, know-how and records of the types set
forth in paragraphs (a) and (b) above, also extends to such
types of information, know-how, records and tangible property
of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the
same to the Company or to the Executive in the course of the
Company's business.
(d) Executive agrees that, upon request of Company or upon
termination or expiration, of this Agreement, for any reason,
Executive shall return to Company all documents, disks or
other computer media, or other materials that have been
released to Executive by the Company, or is in his possession
or control, that may contain Proprietary Information, or that
can be derived from ideas, concepts, creations, or trade
secrets and other Proprietary Information.
(e) This Section 7.1 is intended to, and shall, expand the
protection of Company's trade secrets and confidential and
proprietary information. Therefore, this Section shall be
interpreted in conjunction with other agreements or Company
policies, if any, in order to provide the maximum possible
protection to such trade secrets and confidential and
proprietary information. Should any term or condition of this
Agreement conflict with any other agreement or policy, the
most protective term shall apply, so long as such term is
enforceable as a matter of law.
7.2 DEVELOPMENTS.
(a) The Executive will make full and prompt
disclosure to the Company of all inventions, improvements,
discoveries, methods, developments, software, and works of
authorship, related to the activities of the Company, whether
patentable or not, which are created, made, conceived or
reduced to practice by the Executive or under his direction or
jointly with others during his employment by the company,
whether or not during normal working hours or on the premises
of the Company (all of which are collectively referred to in
this Agreement as "Development").
9
(b) The Executive agrees to assign and does hereby
assign to the Company (or any person or entity designated by
the Company) all his right, title and interest in and to all
Developments and all related patents, patent applications,
copyrights and copyright applications. The Executive also
acknowledges that all work fixed in a tangible medium of
expression shall be deemed a work made for hire under the US
Copyright Act such that the work is owned by the Company at
the moment of creation.
(c) The Executive agrees to cooperate fully with the
Company, both during and after his employment with the
Company, with respect to the procurement, maintenance and
enforcement of copyrights and patents (both in the United
States and foreign countries) relating to Developments. The
Executive shall sign all papers, including, without
limitation, copyright applications, patent applications,
declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which the Company may
deem necessary or desirable in order to protect its rights and
interest in any Development.
7.3 OTHER AGREEMENTS. The Executive hereby represents that his
performance of all the terms of this Agreement and as an
employee of the Company does not and will not breach the terms
of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret,
confidential or proprietary information, knowledge or data
acquired by his in confidence or in trust prior to his
employment with the Company or to refrain from competing,
directly or indirectly, with the business of such previous
employer or any other party.
8. NOTICES. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon sending, by registered or certified mail, postage prepaid,
addressed to the other party at the address shown above, or at such other
address or addresses as either party shall designate to the other, in writing,
in accordance with this Section 8. Personal delivery to the Company shall be
deemed effective when such notice is delivered to the Chief Executive Officer.
9. PRONOUNS. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement, except that the Nonstatutory Stock Option, Agreement
10
Regarding Confidential Information and the Prodigy Business Conduct Guidelines,
and Intellectual Property Agreement shall remain in full force and effect,
unless otherwise specifically provided herein.
11. AMENDMENT. This Agreement may be amended or modified only by
a written instrument executed by both the Company and the Executive.
12. GOVERNING LAW. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Texas, without
reference to conflict of law principles.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to its assets or business; PROVIDED, HOWEVER, that
the obligations of the Executive are personal and shall not be assigned by him.
14. SURVIVING TERMS. The provisions of Sections 5.2, 5.3, 5.4,
5.5, and 14 shall survive the expiration or termination of this Agreement under
the circumstances specified in those Sections for the periods specified in such
Sections. Sections 6 and 7 shall survive the termination of this Agreement.
15. MISCELLANEOUS.
15.1 No delay or omission by either the Company or the
Executive in exercising any right under this Agreement shall
operate as a waiver of that or any other right. A waiver or
consent given by either the Company or the Executive on any
one occasion shall be effective only in that instance and
shall not be construed as a bar or waiver of any right on any
other occasion.
15.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or
affect the scope or substances of any section of this
Agreement.
15.3 If any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be
affected or impaired thereby. Any provision found to be
invalid, illegal or unenforceable shall be deemed, without
further action on the part of the parties hereto, to be
modified, amended and/or limited to the minimum extent
necessary to render such clauses and/or provisions valid and
enforceable.
15.4 Any payments to the Executive pursuant to the terms of
this Agreement shall be reduced by such amounts as are
required to be withheld with respect thereto under all present
and future federal,
11
state and local tax laws and regulations, and other laws and
regulations, as well as other deductions subsequently
authorized in writing by the Executive.
12
IN WITNESS THEREOF, the parties hereto have executed this
Agreement as of the day and year set forth above.
PRODIGY COMMUNICATIONS LIMITED PARTNERSHIP
BY: PRODIGY COMMUNICATIONS CORPORATION, GENERAL PARTNER
______________________ Date ________________
EXECUTIVE
______________________ Date ________________
13
