VONAGE]
Exhibit 10.24
[VONAGE]
October 9, 2013
Xxxx Xxxxxx
C/O Vocalocity, Inc.
0000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxx, XX 00000
Dear Wain:
Vonage Holdings Corp. (“Vonage”), on behalf of its newly acquired subsidiary, Vocalocity, Inc. (the “Subsidiary” and, together with Vonage, the “Company”), is extending an offer of employment. This offer letter (the “Offer Letter”) shall set forth the terms of your employment with the Company.
1. Employment
(a) | You will be employed in the position of President of the Subsidiary, reporting to the Chief Executive Officer of the Company. You shall have the duties and responsibilities customarily performed by a President of a business unit of a public company and such other duties as may be assigned to you by the Chief Executive Officer of the Company from time to time. You shall devote your full-time working time to your duties for the Company, except that you may (i) serve on corporate boards, with the prior consent of the Chief Executive Officer, the Chairman of the Board and the Lead Independent Director of the Board of Directors of the Company, (ii) serve on the boards of, or as an advisor to, the entities listed on a schedule to be provided in writing by You to Vonage within ten (10) days following the date of this Offer Letter, subject to the mutual consent of You and the Chief Executive Officer of the Company, not to be unreasonably withheld, (iii) serve on civic or charitable boards or engage in charitable activities without remuneration therefor, and (iv) manage your personal investments, and serve as an executor, trustee, or in a similar fiduciary capacity in connection therewith, provided that such activities do not, individually or in the aggregate, result in a conflict of interest with the Company, a breach of the restrictive covenants set forth in your Employee Covenants Agreement (described in Section 8(a) below), or conflict materially with the performance of your duties under this Offer Letter. |
(b) | Your employment will commence on the Closing (as defined in the Agreement and Plan of Merger, dated as of October [__], 2013, by and among Vonage, the Subsidiary, and certain other parties thereto) (the “Commencement Date”). |
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2. Location
Your office location will be the Subsidiary’s offices in Atlanta, Georgia, with travel to Vonage’s headquarters in Holmdel, New Jersey, as required for business reasons.
3. Compensation
(a) | The Company will pay you an annual base salary (“Base Salary”) of $325,000, less applicable withholding, payable in equal installments in accordance with the Company’s regular payroll practices for similarly situated employees, but in no event less frequently than biweekly in arrears. |
(b) | In addition to your Base Salary, for calendar year 2013, you will be eligible to receive the annual cash bonus award that you were eligible to receive under the Subsidiary Executive Bonus Plan based on the achievement of the existing performance-based criteria under the Subsidiary Executive Bonus Plan. |
(c) | Commencing in calendar year 2014, you will be eligible for an annual cash bonus with a Target Bonus Opportunity (“TBO”) of 60% of your current Base Salary for the applicable year. The amount of your annual bonus will be based on the achievement of performance objectives determined by the Company, in its sole discretion, after good faith consultation with you. In 2014, 50% of TBO attainment will be tied to performance objectives related to the performance of the Subsidiary and 50% of TBO attainment will be tied to performance of the Company. TBO payouts are not guaranteed and are granted in the Company’s sole discretion. When made, TBO payouts are generally paid in late February/early March. You must be employed on the payout date to receive any TBO payout. |
4. Equity Awards
(a) | You will be granted Restricted Stock Units (“RSUs”) under the Vonage Holdings Corp. Amended and Restated 2006 Incentive Plan (the “Incentive Plan”) covering a number of shares of Vonage’s common stock which have a value at the date of grant based on the closing price per share on such date equal to three million dollars ($3,000,000). The RSUs will be granted on the first trading day of the calendar month that follows the Commencement Date. The number of the RSUs to be granted shall be based on the closing price of the Company’s common stock on the date of grant. |
(b) | Such RSUs shall be issued on the form of RSU agreement (the “RSU Agreement”) approved by the Board for RSU grants made under the Incentive Plan, with the number of shares being subject to adjustment based on subsequent stock splits, reverse stock splits, other adjustments, or recapitalizations, as provided in the Incentive Plan. The RSUs shall be issued in three tranches as set forth below. Each tranche shall vest only |
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upon satisfaction of both the time-based and performance-based vesting criteria applicable to such tranche. 25% of the XXXx xxxxx xx Xxxxxxx 0 XXXx; 45% of the XXXx xxxxx xx Xxxxxxx 0 XXXx and, 30% of the RSUs shall be Tranche 3 RSUs.
(i) | Subject to Section 6(a), the Tranche 1 RSUs shall vest if the 2014 performance criteria applicable to such tranche of RSUs are attained and you are continuously employed through December 31, 2015. |
(ii) | The Tranche 2 RSUs shall vest if the 2015 performance criteria applicable to such tranche of RSUs are attained and you are continuously employed through December 31, 2015. In addition, if the 2014 revenue target and attainment for that metric is not achieved in 2014, the 2014 revenue attainment can be made up in 2015 if the 2015 revenue target is achieved, so that both the 2014 and 2015 revenue attainments may be achieved in 2015. |
(iii) | The Tranche 3 RSUs shall vest if the 2016 performance criteria applicable to such tranche of RSUs are attained and you are continuously employed through December 31, 2016. |
(c) | The performance criteria applicable to each tranche of RSUs shall be based on the achievement of performance objectives related to the performance of the Subsidiary, as determined by the Company in its sole discretion after good faith consultation with you. |
(d) | The RSU grant will be governed by and subject to the terms of the Incentive Plan and the RSU Agreement and in the event of a conflict between this Section and the Incentive Plan and RSU Agreement, the terms of the Incentive Plan and RSU Agreement shall control. |
5. Holding Period
(a) In addition to applicable securities law restrictions, the portion of the proceeds you receive in connection with Vonage’s acquisition of the Subsidiary (the “Merger”) in the form of Vonage common stock (“Stock Merger Consideration”) shall be subject to restrictions on transfer as follows (the “Holding Period”):
(i) 100% of the Stock Merger Consideration shall be non-transferrable prior to the first anniversary of the Closing.
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(ii) 50% of the Stock Merger Consideration shall be non-transferrable prior to the second anniversary of the Closing.
Notwithstanding the foregoing, the transfer restrictions pursuant to this Section 5 shall be inapplicable upon the termination of your employment with the Company for any reason other than by the Company for Cause or by you without Good Reason. For the avoidance of doubt, none of the Stock Merger Consideration shall be subject to forfeiture and the provisions of this Section 5 shall only restrict the transfer of your Stock Merger Consideration for the time periods specified above.
(b) The Stock Merger Consideration certificates will bear legends to reflect the | transfer restrictions described above. |
(c) | As consideration for the Holding Period described in this Section 5, you shall also receive, at the end of the two (2) year Holding Period, an additional RSU grant with a value equal to ten percent (10%) of the value (determined as of the closing date of the Merger) of the shares subject to the Holding Period. |
6. Severance
(a) | If your employment is terminated by the Company without Cause or by you with Good Reason, each as defined below, you will be entitled to severance pay equal to nine (9) months of your then-current base salary, less applicable withholding, which will be paid by the Company during its regular payroll cycle over the nine (9) month period following the date of your employment termination; provided that the first payment shall be made on the sixtieth (60th) day after your termination of employment, and such first payment shall include payment of any amounts that otherwise would be due prior thereto. In addition, if your employment is terminated by the Company without Cause or by you with Good Reason on or after December 31, 2014 and prior to December 31, 2015 and the 2014 performance criteria applicable to the Tranche 1 RSUs have been attained as of such termination date, the Tranche 1 RSUs shall fully vest and be settled on the sixtieth (60th) day following your termination of employment. Notwithstanding anything to the contrary herein, the payments and benefits set forth in this Section 6 shall be subject to and contingent upon your execution and delivery to the Company of a Separation Agreement and General Release in a form reasonably acceptable to the Company in its sole discretion (the “Release”), and such Release having become effective and irrevocable in its entirety within sixty (60) days of your termination of employment. For the avoidance of doubt, any severance payments and benefits set forth in this Section 6 shall be forfeited u |
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nless an effective Release has been received by the Company and has become irrevocable no later than sixty (60) days following your termination of employment.
(b) | Definitions: |
“Cause” means (i) material failure to perform your employment duties (not as consequence of any illness, accident or other disability), (ii) continued, willful failure to carry out any reasonable lawful direction of the Company given to you in writing, (iii) diverting or usurping a corporate opportunity of the Company, (iv) fraud, willful malfeasance, gross negligence or recklessness in the performance of employment duties, (v) willful failure to comply with any of the material terms of this Offer Letter, (vi) other serious, willful misconduct which causes material injury to the Company or its reputation, including, but not limited to, willful or gross misconduct toward any of the Company’s other employees, (vii) conviction of, or plea of nolo contendre to, a felony or a crime involving moral turpitude, and/or (viii) material violation of any written Company policies or procedures.
“Good Reason” means: (i) a material decrease in your base salary; (ii) a material diminution of your authorities, duties or responsibilities; (iii) a failure of the Company to pay material compensation due and payable to you in connection with your employment; (iv) willful failure to comply with any of the material terms of this Offer Letter; and/or (v) the relocation of your principal office more than 50 miles away from Atlanta, Georgia; provided, however, that no event or condition described in clauses (i) through (v) shall constitute Good Reason unless (x) you give the Company’s most senior Human Resources employee written notice of your intention to terminate your employment for Good Reason and the grounds for such termination within 60 days after the occurrence of the event giving rise to the “Good Reason” termination and (y) such grounds for termination (if susceptible to correction) are not corrected by the Company within 30 days of its receipt of such notice (or, in the event that such grounds cannot be corrected within such 30-day period, the Company has not taken all reasonable steps within such 30 day period to correct such grounds as promptly as practicable thereafter). If the Company does not correct the grounds for termination during such 30-day cure period (or take all reasonable steps within such 30 day period to correct such grounds as promptly as practicable thereafter), your termination of employment for “Good Reason” shall become effective on the first business day following the end of the cure period. Unless otherwise advised by the Company, you will be expected to perform services for the Company during the cure period.
7. Benefits
(a) | You shall be entitled to participate in all employee health and welfare plans, programs and arrangements of the Company and the Subsidiary, to the extent you are eligible to participate in such plans, in accordance with their respective terms, as may be |
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amended from time to time and on the basis no less favorable than that made available to other similarly situated senior executives of the Subsidiary.
(b) | You will annually be entitled to twenty (20) Flexible Days Off (FDO) to be used in accordance with our Flexible Days Off policy. |
8. Miscellaneous
(a) | In connection with your employment you will be required to enter into the Subsidiary’s standard form of Employee Covenants Agreement; provided that such agreement shall cover the Company and shall subject you to non-competition and non-solicitation restrictive covenants during the term of your employment and for a period that will expire on the later of (i) the fifth (5th) anniversary of the Closing and (ii) the second (2nd) anniversary of the termination of your employment. |
(b) | You hereby represent to the Company that you are under no obligation or agreement that would prevent you from becoming an employee of the Company or adversely impact your ability to perform the expected responsibilities. By accepting this offer, you agree that no trade secret or proprietary information not belonging to you or the Company will be disclosed or used by you at the Company. |
(c) | This Offer Letter does not create an implied or express guarantee of continued employment. By accepting this offer, you are acknowledging that you are an employee at-will. This means that either you or the Company may terminate your employment at any time and for any reason or for no reason. This Offer Letter contains the entire agreement and understanding between you and the Company with respect to the terms of your employment and supersedes any prior or contemporaneous agreements, understandings, communications, offers, representations, warranties, or commitments by or on behalf of the Company, whether written or oral with respect to the terms of your employment, including, without limitation, your offer letter dated January 8, 2010 with the Subsidiary and your employment agreement dated as of August 18, 2010 with the Subsidiary (the “Prior Agreement”); provided, however, that the foregoing shall not affect your eligibility to receive an annual bonus in respect of calendar year 2013 as described in Section 3(b) above and in Section 4(b) of the Prior Agreement. Except for amendments to increase compensation payable to you, the terms of this Offer Letter may not be amended except pursuant to a written agreement between you and the Company. |
(d) | Section 409A |
(i) | The intent of the parties is that payments and benefits under this Offer Letter comply with or be exempt from Internal Revenue Code Section 409A and the regulations and guidance promulgated there under (collectively “Section 409A”) and, accordingly, to the maximum extent permitted, this Offer Letter shall be interpreted to be exempt from Section 409A or in compliance therewith, |
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as applicable. If you notify the Company that you have received advice of tax counsel of national reputation with expertise in Section 409A that any provision of this Offer Letter (or of any award of compensation, including equity compensation or benefits) would cause you to incur any additional tax or interest under Section 409A (with specificity as to the reason thereof) or the Company independently makes such determination, the Company shall, after consulting with you, reform such provision to try to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to you and the Company of the applicable provision without violating the provisions of Section 409A.
(ii) | A termination of employment shall not be deemed to have occurred for purposes of any provision of this Offer Letter providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Section 409A upon or following a termination of employment, unless such termination is also a “separation from service” within the meaning of Section 409A and the payment thereof prior to a “separation from service” would violate Section 409A. For purposes of any such provision of this Offer Letter relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” |
(iii) | If, as of the date of your “separation from service” from the Company, you are a “specified employee” (within the meaning of that term under Section 409A(a)(2)(B)), then with regard to any payment or the provision of any benefit that is considered “nonqualified deferred compensation” under Section 409A (whether under this Offer Letter, any other plan, program, payroll practice or any equity grant) and is payable upon your separation from service, such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6) month-and-one-day period measured from the date of your “separation from service,” and (B) the date of your death (the “Delay Period”) and this Offer Letter and each such plan, program, payroll practice or equity grant shall hereby be deemed amended accordingly. Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to you in a lump sum with interest at the prime rate as published in the Wall Street Journal on the first business day of the Delay Period (provided that any payment measured by a change in value that continues during the Delay Period shall not be credited with interest for the Delay Period), and any remaining payments and benefits due under this Offer Letter shall be paid or provided in |
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accordance with the regularly scheduled payment dates specified for them herein.
(iv) | For purposes of Section 409A, your right to receive any installment payments pursuant to this Offer Letter shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Offer Letter specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company. |
(v) | To the extent any reimbursement or in-kind payment provided pursuant to this Offer Letter is deemed nonqualified deferred compensation subject to Section 409A then (i) all such expenses or other reimbursements as provided herein shall be payable in accordance with the Company’s policies in effect from time to time, but in any event shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by you; (ii) no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year; and (iii) the right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit. |
(vi) | No amounts payable to you by the Company or any of its subsidiaries or affiliates under this Agreement or any other agreement that constitute nonqualified deferred compensation subject to Section 409A shall be subject to offset by any other amount, except as permitted under Section 409A. |
(e) | Withholding: The Company may withhold any tax (or other governmental obligation) that may result from the payments made and benefits provided to you under this Offer Letter or require you to make other arrangements satisfactory to the Company to enable it to satisfy all such withholding requirements. |
(f) | Governing Law; Waiver of Jury Trial. All matters affecting this Offer Letter, including the validity thereof, are to be governed by, and interpreted and construed in accordance with, the laws of the State of New Jersey applicable to contracts executed in and to be performed in that State. YOU AND THE COMPANY HEREBY ACKNOWLEDGE AND AGREE THAT YOU AND THE COMPANY ARE HEREBY WAIVING ANY RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER YOU OR THE COMPANY AGAINST THE OTHER IN CONNECTION WITH ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS OFFER LETTER. |
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(g) | Remedies. In addition to all other legal and equitable remedies, the prevailing party in any dispute that in any way relates to this Offer Letter or your employment hereunder shall be entitled to recover his or its reasonable attorneys’ fees and expenses incurred in connection with such dispute. |
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Notwithstanding anything to the contrary, this Offer Letter shall be null and void ab initio if the Closing does not occur. Please indicate your acceptance of this offer by signing the Offer Letter in the space provided below.
Sincerely,
/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Chief Financial Officer and Treasurer
Agreed and Accepted:
Name: _______/s/ Xxxx Xxxxxx ____________
Xxxx Xxxxxx
Date: __10/09/2013_________
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