EXHIBIT 10.01
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EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), effective as of the 15th day
of April, 2004 (the "Effective Date"), is entered into by and between XXX.xxx,
Inc., a Delaware corporation (the "Company") and Xxxxx X. Xxxxxx (the
"Employee").
WHEREAS, the Company desires to employ the Employee upon the terms and
conditions set forth in this Agreement; and
WHEREAS, the Employee desires to be employed by the Company, and to perform
the duties assigned to him hereunder, upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the transactions contemplated hereby
and the respective covenants and agreements of the parties herein contained, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Employee, and the
Employee hereby agrees to serve the Company, on the terms and conditions
hereinafter set forth in this Agreement.
2. TERM. The employment of the Employee by the Company hereunder shall
commence on April 15, 2004 and continue until terminated by either party in
accordance with Section 7 of this Agreement (the "Employment Period").
3. POSITION AND DUTIES. During the Employment Period, the Employee shall
serve as the Company's "Chief Executive Officer," and shall have such
responsibilities and authority as may normally be exercised by a Chief Executive
Officer of a similar company and shall faithfully perform all duties and
responsibilities consistent with his position as Chief Executive Officer and the
duties and responsibilities relating to the business or operations of the
Company (or its subsidiaries) as the Company's Board of Directors (the "Board of
Directors"), any committee thereof or the Chairman of the Board of Directors,
may direct from time to time. Without limiting the generality of the foregoing,
it is anticipated that the Employee's primary duties and responsibilities shall
be overseeing and directing the overall business and operations of the Company,
including pursuing or reviewing potential financings, mergers and acquisitions,
generating or approving business plans, establishing corporate strategy,
pursuing or reviewing material commercial ventures and relationships, steering
the Company's operations toward management approved forecasts and budgets, and
advising the Board of Directors on material business matters affecting the
Company. In the performance of the Employee's duties and responsibilities
hereunder, the Employee shall regularly report to the Board of Directors. In
addition, the Employee agrees to serve as a director of the Company.
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Consistent therewith, the Board of Directors shall take all actions necessary to
duly elect and appoint the Employee to serve as a director of the Company, as
soon as reasonably possible after the date hereof.
The Employee will fulfill his duties and responsibilities to the Company
hereunder from the then-current principal corporate office of the Company,
currently located in New Haven, CT, or from the offices of the Company in and
around Fairfax County, Virginia. Employee understands that the Company's
principal corporate office may be moved along the corridor between Greater New
Haven, CT and New York City or the surrounding metropolitan area of New York
City and, in such event and upon the Company's request, Employee agrees to
primarily perform his duties and responsibilities from that office, provided,
however, that regardless of whether the principal corporate office is located in
New Haven, CT or in the corridor between Greater New Haven, CT and New York City
or the surrounding metropolitan area of New York City, the Employee shall not be
required by the Company to work from such principal corporate office more than
30 days per calendar quarter. Notwithstanding the foregoing, the Employee agrees
to travel as is otherwise necessary, in the Board of Directors' reasonable
determination, to fulfill his duties and responsibilities as set forth in this
Agreement.
4. BEST EFFORTS. The Employee's employment with the Company shall be full
time and the Employee shall devote his best efforts and all of his business time
to the performance of his duties and responsibilities as set forth in this
Agreement. The Employee shall not, while an employee of the Company, engage in
any other gainful occupation or activity which conflicts with or impinges upon
the full and faithful performance of the Employee's duties, or otherwise
violates any other term or provision of this Agreement (or any other agreement
entered into by the Employee in connection with his employment with the Company)
or any Company policy. Notwithstanding the above, the Employee shall not be
prohibited from being involved in charitable activities (including serving on
not-for-profit boards) and serving on boards and committees of for-profit
entities so long as such activities do not interfere with the performance of his
duties hereunder or otherwise violate any provision of this Agreement, provided,
the Board of Directors has given its previous consent in each instance to such
activities, which consent shall not be unreasonably withheld, conditioned or
delayed. The Company hereby consents, as of the Effective Date, to the Employee
continuing to serve on the board of directors of KMC Telecom Holdings, Inc.
(including any affiliates, "KMC"), provided, such consent is revocable at any
time by the Company in the event the Board of Directors reasonably determines
that the Employee's continued participation on such board is interfering with
the Employee's duties hereunder or constitutes a Competitive Activity (as
defined in Section 8(a) below). If, upon the written request of KMC, the
Employee resigns as a director of KMC at any time during the 2004 calendar year
because KMC has determined that the Employee's duties hereunder would conflict
with the Employee's duties as a director to KMC, the Company agrees to pay to
the Employee an amount equal to Fifty Thousand U.S. dollars ($50,000.00), less
any director fees paid to the Employee by KMC for his service to KMC as a
director for its 2004 fiscal year (the "Resignation Fee"),
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provided the Employee has furnished the Company with supporting documentation in
respect of the Employee's request reasonably acceptable to the Company's chief
financial officer and the Board of Directors. The Resignation Fee shall be
payable at the time prescribed for the payment of the bonus under said Section
6(e)(ii), less applicable withholdings. Additionally, the Company hereby
consents, as of the Effective Date, to the Employee continuing to provide
limited assistance to Velocita Corp. in connection with current litigation
efforts, which are not expected to continue beyond December 31, 2004, provided,
such consent is revocable at any time by the Company in the event the Board of
Directors reasonably determines that the Employee's continued involvement
therewith is interfering with the Employee's duties hereunder.
5. COMPENSATION.
(a) Base Compensation. During the Employment Period, the Company shall
pay to the Employee an annual base salary of Three Hundred and Fifty Thousand
U.S. Dollars ($350,000.00) (as adjusted pursuant to this Section 5(a), the "Base
Compensation"). The Base Compensation shall be paid to the Employee in
accordance with the normal payroll schedules of the Company in effect from time
to time, less all appropriate withholdings for federal, state and local taxes
and other mandated charges, unemployment insurance, and benefits. The amount of
the Base Compensation shall be subject to review annually during the Employment
Period, and may, in the Board of Directors' discretion, be increased at any
time. All increases to the Base Compensation, if any, shall be based on the
condition of the Company's business and results of operations and the Company's
evaluation of the Employee's individual performance for the relevant period. Any
increases made to the Base Compensation shall be in the sole and absolute
discretion of the Board of Directors and the Employee acknowledges and agrees
that the Board of Directors shall have no obligation to cause an increase in the
Base Compensation at any time.
(b) Stock Options. Partly as an inducement to the Employee's
acceptance of employment with the Company hereunder, the Company shall grant to
the Employee options to purchase an aggregate of ten million (10,000,000) shares
of the Company's common stock, subject to the Employee's execution and delivery
of the stock option agreement in the form attached hereto as Exhibit A (the
"Option Agreement), which shall include terms for full vesting of the option
shares upon the three-year anniversary of the Effective Date subject to a six
month "cliff" as set forth in the Option Agreement. Promptly after the Effective
Date, the Company shall prepare and promptly file with the Securities and
Exchange Commission, at the Company's sole expense, a registration statement on
Form S-8 covering all of the shares underlying the options granted to the
Employee as contemplated by this Section 5(b) and shall use its best efforts to
cause such registration statement to be declared effective by the Commission.
The Option Agreement shall provide that, if Employee's employment with the
Company is terminated either by the Company without Cause or by the Employee for
Good Reason, the vesting of the options shall accelerate such that all unvested
shares subject to the options that would
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otherwise have vested over the period of 12 months following the date of
termination will be immediately vested and exercisable as of the date of
termination and shall remain exercisable until the first anniversary of the date
of termination. In addition, the Option Agreement shall provide that, if
Employee's employment with the Company is terminated either by the Company
without Cause or by the Employee for Good Reason at any time following a Change
in Control (as defined below), all shares subject to the options shall be
immediately vested and exercisable as of the date of termination and shall
remain exercisable until the first anniversary of the date of termination. The
Employee shall also be eligible to receive future stock option grants during his
term of active employment with the Company at the discretion of the Board of
Directors.
For purposes of this Agreement, the term "Change in Control" shall mean: (i) any
sale, lease, exchange or other transfer (in one transaction or series of related
transactions) of all or substantially all of the assets of the Company; (ii)
individuals who, as of the date hereof, constitute the entire Board of Directors
of the Company (the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board of Directors, provided that any individual
becoming a director subsequent to the date hereof whose election or nomination
for election was approved by a vote of at least a majority of the then Incumbent
Directors shall be, for the purposes of this provision, considered as though
such individual were an Incumbent Director; (iii) any consolidation or merger of
the Company with any other entity (including, without limitation, a triangular
merger) where the security holders of the Company (including for these purposes
the holders of all convertible and exchangeable securities and all exercisable
securities, including options and warrants) immediately prior to the
consolidation or merger, would not, immediately after the consolidation or
merger, beneficially own, directly or indirectly, securities representing at
least fifty percent (50%) of the total voting power of all of the outstanding
securities of the entity issuing cash or securities in the consolidation or
merge (including for these purposes all convertible and exchangeable securities
and all exercisable securities, including options and warrants, all of which
shall be deemed outstanding securities with the voting rights of the securities
for which they are then exercisable or exchangeable or into which they are then
convertible); or (iv) a person, including a "person" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), other than the Company, an employee benefit plan sponsored by the
Company, any person who acquires beneficial ownership from the Company, or,
except as provided below, Deutsche Bank AG London acting through DB Advisors,
LLC and its "affiliated" entities (as defined in Rule 12(b)(2) under the
Exchange Act)(collectively, "DB") or VantagePoint Venture Partners III (Q),
L.P., VantagePoint Venture Partners III, L.P., VantagePoint Communications
Partners, L.P., and VantagePoint Venture Partners 1996, L.P. and each of their
"affiliated" entities (collectively, the "VantagePoint Entities"), becomes after
the Effective Date the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the
Company's then outstanding voting securities (including for these purposes all
convertible and exchangeable securities and all exercisable securities,
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including options and warrants, all of which shall be deemed outstanding
securities with the voting rights of the securities for which they are then
exercisable or exchangeable or into which they are then convertible); provided,
however, that if either DB or the VantagePoint Entities becomes after the
Effective Date the beneficial owner, directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company's then outstanding voting securities (as defined
above) in connection with a transaction that requires DB or the VantagePoint
Entities to file a Schedule 13E-3 that results in the Company's securities no
longer being registered under the Exchange Act, a Change of Control shall be
deemed to have occurred for purposes of this clause (iv).
6. THE EMPLOYEE'S BENEFITS. As an employee of the Company, the Employee
shall be entitled to receive and enjoy the following benefits during the
Employment Period:
(a) Participation in Company Benefit Plans. The Employee shall be
entitled to participate in and to receive benefits under all applicable employee
benefit plans, policies, practices, programs and arrangements offered by the
Company from time to time during the Employment Period to its employees
generally, subject to and on a basis consistent with the terms, conditions, and
overall administration of such plans and arrangements by the Company.
Notwithstanding the provisions of this Section 6(a), nothing contained herein is
intended, or shall be construed, to require the Company to institute or maintain
any benefit plan or arrangement, provided, however, that the benefits offered to
the Employee shall be comparable to those offered to Company's senior executive
personnel. In addition, nothing contained herein shall limit the right of the
Company to modify, suspend or discontinue any and all benefit plans or
arrangements.
(b) Vacation; Sick Leave and Personal Leave. The Employee shall be
entitled to an amount of paid vacation, sick leave and personal leave as is made
available to comparably situated Company personnel generally pursuant to then
current Company policy, provided that Employee shall be eligible to accrue up to
at least 4 weeks of paid vacation per full calendar year of employment on a
monthly accrual basis in accordance with Company policy. In addition to the
foregoing, the Employee shall be entitled to receive all paid holidays given by
the Company to its employees generally.
(c) Business Expense Reimbursement. The Company shall promptly
reimburse the Employee for all reasonable, ordinary and necessary business
expenses paid or incurred by the Employee in performing his duties and
responsibilities hereunder (including, without limitation, expenses incurred by
the Employee in connection with travel to and from the Company's principal
corporate office, and the other travel expenses described in Section 3 above),
provided that the Employee shall have (i) submitted such documentation as may be
requested by the Company in accordance with the expense policies of the Company
in effect from time to time to substantiate each reimbursement request and (ii)
otherwise complied with the expense reimbursement policies of the Company then
in effect. Without limiting the foregoing, the Company's reimbursement
obligation hereunder shall not include reimbursement
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for country club dues or similar payments for which the Company is not entitled
to take a deduction on its federal income tax return.
(d) Automobile. During the Employment Period, the Company shall
reimburse the Employee up to a gross amount of One Thousand U.S. dollars
($1,000.00) per calendar month for automobile lease, insurance and maintenance
costs (other than fuel) expended by the Employee during that month.
(e) Bonus.
(i) Signing Bonus. The Company shall pay to the Employee a
one-time signing bonus of One Hundred Thirty-One Thousand Two Hundred Fifty U.S.
dollars ($131,250.00), less applicable withholdings, payable in lump sum within
ninety (90) days of the Effective Date, provided the Employee has not been
terminated for Cause (as defined in Section 7(a) below) or resigned for other
than Good Reason (as defined in Section 7(d) below) on or prior to the date of
payment.
(ii) 2004 Fiscal Year Bonus. The Employee shall be eligible to
receive a one-time bonus, based upon achievement by the Company of certain
cumulative, year-end operating results for the Company's 2004 fiscal year, which
will be established by the Company's Board of Directors by June 30, 2004, after
consultation with Employee; provided, that, the Employee shall not be eligible
for such bonus if he has been terminated for Cause or resigned for other than
Good Reason on or prior to December 31, 2004. The bonus targets will be based
upon achievement by the Company of certain operating results (reasonably
anticipated to include EBITDA, Revenues and Cash Flows) forecast in the
Company's authorized 2004 operating plan and forecast, as previously approved by
the Board of Directors. Any bonus earned under this Section 6(e)(ii) shall be
due and payable on or before February 14, 2005.
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(iii) Performance Bonus. From and after January 1, 2005, for so
long as the Employee remains employed at the Company, the Employee may
participate during the Employment Period in any bonus plan established by the
Board of Directors in its discretion for which the Employee shall be eligible,
as determined by the Board of Directors in establishing such bonus plan, in
accordance with such plan's terms and conditions. Nothing herein shall bind or
obligate the Board of Directors or the Company to establish or maintain any
given bonus plan for any Company personnel, including the Employee. Subject to
the foregoing, it is anticipated that the Employee shall be eligible to earn a
target bonus in an amount up to one hundred percent (100%) of the Employee's
Base Compensation based upon achievement by the Company for the Company's fiscal
year of performance targets established by the Board of Directors at the
beginning of each fiscal year.
(f) Indemnification.
(i) Employee shall be eligible for indemnification and
advancement of expenses to the fullest extent authorized under the Company's
bylaws, certificate of incorporation and applicable law. Such indemnification
shall continue as to the Employee even if he has ceased to be an employee,
officer, or director of the Company and shall inure to the benefit of his heirs
and estate. During the Employee's employment with the Company and from and after
the date that the Employee's employment is terminated for any reason whatsoever,
the Company shall maintain a D&O insurance or similar policy (in form and
coverage reasonably acceptable to the Employee) with insurance benefits equal to
at least $10,000,000. During the Employee's employment with the Company and from
and after the date that the Employee's employment is terminated for any reason
whatsoever, the Employee shall receive the same benefits provided to any of the
Company's officers and directors under any additional D&O insurance or similar
policy, indemnification agreement, Company policy or the certificate of
incorporation or bylaws of the Company.
(ii) In furtherance and not in limitation of the foregoing, the
Company shall indemnify Employee, to the fullest extent permitted by applicable
law as it presently exists or may hereafter be amended, if he was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that he is or was a director or officer of the Company, or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise or
non-profit entity, against expenses (including attorneys' fees and
disbursements, inclusive of any appeal), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
claim, action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Company shall
indemnify Employee if he was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that he is or
was a director or officer of the Company, or such director or officer of the
Company is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise or non-profit entity, against expenses (including attorneys'
fees and disbursements, inclusive of any appeal) actually and reasonably
incurred by him in connection with the defense or settlement of such claim,
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or is not opposed to the best interests of the Company and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which Employee shall have been adjudged to be liable to the Company unless and
only to the extent that a court of competent jurisdiction (the "Court") in which
such claim, action or suit was brought shall determine upon application
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that, despite the adjudication of liability but in view of all the circumstances
of the case, Employee is fairly and reasonably entitled to indemnity for such
expenses which the Court shall deem proper. Expenses (including attorneys' fees
and disbursements, inclusive of any appeal) incurred by Employee in defending
any pending or threatened civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Company in advance promptly upon
(and in no event more than 30 days after) receipt of invoices reflecting such
expenses incurred by the Employee; provided, however, that the Employee shall
undertake to repay such amount to the extent that it shall ultimately be
determined that the Employee is not entitled to be indemnified by the Company as
authorized in this, or granted pursuant to, this Section or applicable law.
Subject to applicable law, the Employee's right to indemnification or
advancement of expenses from the Company shall be enforceable by the Employee in
any court of competent jurisdiction. The burden of proving that indemnification
or advances are not appropriate shall be on the Company.
(iii) The foregoing shall not be deemed exclusive of any other
rights to which the Employee may be entitled under any statute, rule of law,
provision of the certificate of incorporation, as amended from time to time,
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
7. TERMINATION. The Employee's employment with the Company hereunder may be
terminated as follows:
(a) Termination for Cause. The Employee's employment with the Company
may be terminated by the Board of Directors at any time for "Cause." As used
herein "Cause" shall mean, as reasonably determined by the Board of Directors:
(i) theft, fraud, dishonesty, gross negligence or willful misconduct by the
Employee in connection with the performance of his duties hereunder; provided,
however, that with respect to the conditions described in this item (i), no
determination of Cause shall be made by the Board of Directors on such basis
unless the Board of Directors has provided written notice to the Employee of the
existence of such condition, the Employee has been granted a reasonable
opportunity to appear before the Board in order to respond to such
determination, and the Employee fails to cure such condition within thirty
calendar days of receipt of such notice (or such shorter period (but in no event
less than fourteen days) as the Board of Directors reasonably determines is
necessary to avoid further damage to the Company during the pendancy thereof);
(ii) a material breach of this Agreement or a material failure to fulfill or
perform the Employee's duties hereunder; (iii) conviction of a felony or a crime
or civil violation which involves moral turpitude or plea of guilty or nolo
contendere); (iv) a repeated or ongoing failure to comply with the reasonable
directions and instructions of the Board of Directors in connection with the
performance of the Employee's duties and responsibilities hereunder; (v) use or
possession of illegal drugs or excessive use of alcohol, while performing
Company duties or while on Company premises; or (vi) commission of any act, or
failure to act, in bad faith, which, in the reasonable determination of the
Board of Directors has a material adverse effect on the business of the Company;
provided, however, that with respect to the conditions described in items (ii),
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(iv), (v) and (vi) of the foregoing, no determination of Cause shall be made by
the Board of Directors on such basis unless the Board of Directors has provided
written notice to the Employee of the existence of such condition, the Employee
has been granted a reasonable opportunity to appear before the Board in order to
respond to such determination, and the Employee fails to cure such condition
within thirty calendar days of receipt of such notice. If the Company is
represented by outside counsel during the Employee's appearance before the Board
of Directors hereunder, Employee shall have the right to appear with his own
counsel. Upon termination for Cause, the Company shall have no obligations to
pay Employee severance or COBRA payments hereunder; provided, that, the Company
shall pay to the Employee all Base Compensation and accrued benefits owing as of
the date of termination in accordance with the Company's normal practices then
in effect.
(b) Termination for Death or Disability. The Employee's employment
hereunder shall terminate immediately upon the Employee's death or Disability.
For purposes hereof, the term "Disability" shall be used herein as defined in
the Company's disability insurance policy in effect with respect to the Employee
or, absent same, shall mean the Employee's inability, by reason of physical or
mental incapacity (determined by a licensed physician reasonably acceptable to
the Employee and the Board of Directors), to materially perform the essential
functions of his job, with or without a reasonable accommodation by the Company,
for an aggregate of ninety (90) days during any twelve (12) month period, as the
case may be. Once the Employee has become Disabled, payment of any further Base
Compensation and benefits, if any, shall be subject to the Company's disability
insurance coverage in effect with respect to the Employee. If the Employee's
employment shall be terminated due to death or Disability, the Company shall
have no severance obligations to the Employee or the Employee's heirs,
beneficiaries, administrators, executors or other personal representatives under
this Agreement; provided, that, the Company shall pay to the Employee all Base
Compensation and accrued benefits owing as of the date of termination in
accordance with the Company's normal practices then in effect.
(c) Termination Without Cause. The Employee's employment with the
Company may be terminated by the Board of Directors at any time without Cause,
but in the event of any such termination, the Company shall pay the following
severance payments and benefits. In the event that a termination without Cause
occurs at any time before the Employee's twelve month anniversary of employment,
he shall be entitled to receive, as severance, (1) $218,750, which amount shall
be paid over twelve months in accordance with the Company's payroll practice,
and (2) payment of health and dental insurance coverage under COBRA (to the
extent Employee elects to continue such coverage in accordance with the
provisions of COBRA following the date of termination) during the twelve-month
period in which severance is paid as set forth in the subsection (c)(1) above.
In the event that a termination without Cause occurs at any time on or after the
Employee's twelve month anniversary of employment, he shall be entitled to
receive, as severance, (1) his monthly Base Compensation for the period of
eighteen months following the date of termination, which shall be paid over time
in accordance with the
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Company's payroll practice, and (2) payment of health and dental insurance
coverage under COBRA (to the extent Employee elects to continue such coverage in
accordance with the provisions of COBRA following the date of termination)
during such eighteen month severance period. Employee's receipt of any severance
under this Section 7(c) shall be conditioned upon and subject to Employee's
prior execution of the release agreement in the form of that attached hereto as
Exhibit B (including any changes thereto necessitated by applicable law at the
time of execution, the "Release"). No payments of severance hereunder shall be
made until the revocation period, if any, referred to in the Release shall have
expired.
(d) Termination by the Employee. The Employee's employment with the
Company may be terminated by the Employee at any time with or without Good
Reason. In the event of a termination of the Employee's employment with the
Company by the Employee upon his voluntary termination or resignation (other
than a termination of employment with the Company by the Employee for "Good
Reason," as defined below), the Company shall not have any obligation to pay
Employee severance or COBRA payments hereunder; provided, that, the Company
shall pay to the Employee all Base Compensation and accrued benefits owing as of
the date of termination in accordance with the Company's normal practices then
in effect. The Employee agrees to provide the Board of Directors with at least
thirty (30) days' prior written notice of his voluntary cessation of employment
hereunder, subject to the Board of Directors' right to waive, upon notice to the
Employee, such requirement and accelerate the effectiveness of the Employee's
voluntary cessation of employment to an earlier time and date (but not earlier
than the date of the Employee's giving of notice of his voluntary cessation of
employment to the Board of Directors), it being mutually understood and agreed
that the Company shall to continue to pay or furnish to the Employee his Base
Compensation and benefits during the time of continued employment, if any,
following the Employee's notice of his voluntary cessation of employment up
through the effective date of termination. A termination of the Employee's
employment with the Company by the Employee for Good Reason shall be treated as
a termination without Cause under Section 7(c). For purposes hereof, the term
"Good Reason" shall mean that (i) the Employee is required by the Company to
work from the Company's principal corporate office in New Haven, CT or in the
corridor between Greater New Haven, CT and New York City or the surrounding
metropolitan area of New York City (as the case may be) in excess of 30 days per
calendar quarter, or the Company's principal corporate office is moved to a
location other than New Haven, CT or the corridor between Greater New Haven, CT
and New York City or the surrounding metropolitan area of New York City; (ii)
the Company has breached any material term of this Agreement, (iii) any
reduction in the Employee's duties and responsibilities as the Company's Chief
Executive Officer hereunder, (iv) a demotion in the Employee's position or title
at the Company, or (v) the Company has reduced the Employee's Base Compensation
due hereunder; provided, however, that with respect to each of the conditions
described above in items (i), (ii), (iii), (iv) and (v), Employee may not
establish "Good Reason" unless he has provided written notice to the Board of
Directors of the existence of such condition and
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the Company fails to cure such condition within the thirty day period following
receipt of such notice.
(e) Public Statements. Upon termination of the Employee's employment
for any reason, the Board of Directors or the General Counsel of the Company
will direct and control the issuance and content of any announcement, release or
other statement to any employees, commercial partners, insurers, directors,
shareholders and clients of the Company and its subsidiaries, and the press
after consultation with Employee, as appropriate under the circumstances.
(f) Status upon Termination. The termination of the Employee's
employment hereunder, for any reason whatsoever, shall constitute the
termination of this Agreement (subject to the surviving provisions hereof as set
forth in Section 14(k) hereof) and the Employee's effective termination or
resignation from any other positions or duties with the Company and all of its
subsidiaries, including his membership on the Board of Directors, unless
otherwise mutually agreed to by the parties hereto.
8. NON-COMPETITION AND CONFIDENTIALITY.
(a) Non-competition. During the Employment Period and for the longer
of (i) one year following the date of termination of employment hereunder or
(ii) the period in which Employee receives severance under the provisions of
Section 7(c) (collectively, the "Covered Period"), the Employee agrees not to
engage in any Competitive Activity anywhere in the United States or any foreign
territory where the Company is then conducting business on behalf of any party
other than the Company. As used herein, the term "Competitive Activity" shall
mean the following: (i) any primary line of business engaged in by the Company
or any of its subsidiaries during the one-year period prior to termination of
Employee's employment, including, without limitation, providing high-speed
Internet access, voice and data services (and related business consulting) to
businesses (a "Competitive Business"); (ii) serving as an officer, director,
employee, consultant, advisor, agent or representative of any person,
corporation, partnership, limited liability company, sole proprietorship,
association or other business enterprise engaged in a Competitive Business (each
a "Competitive Enterprise"); (iii) owning or acquiring, directly or indirectly,
any interest in any Competitive Enterprise; (iv) soliciting any employee of the
Company or any of the Company's subsidiaries to leave the employ of the Company
or such subsidiary or hiring any of the foregoing persons; provided, however, by
way of clarification, the Employee shall not be deemed in breach of this clause
(iv) in the event he or his new employer launches a general job search (through
advertisement, job posting, or recruiter) that does not exclusively target the
Company's employees; or (v) soliciting or inducing, explicitly or implicitly,
any Client (as defined below) to withdraw, curtail or cancel its business
relationships with the Company or any subsidiary thereof, provided, however, the
Employee shall not be deemed in breach of this clause (v) as a result of mass
advertising or mass marketing campaigns aimed at prospects on customer lists
obtained by the Employee or his new employer from sources other than
12
the Company, and not in violation of this Agreement, and which do not expressly
target the Company's Clients in particular. The Company acknowledges and agrees
that nothing contained in this Section 8 shall be interpreted to prohibit or
preclude the Employee, (x) in connection with the fulfillment of his duties and
responsibilities hereunder, from terminating the services of any employee, agent
or other representative of the Company (or any subsidiary thereof) at the Board
of Directors' request or in the ordinary course of business, or (y) from owning
less than five percent (5%) of the capital stock or other equity interests of
any publicly-traded company listed on a major securities exchange or securities
market (e.g., NASDAQ).
As used herein, the term "Client" shall mean any customer of the Company or
any person or entity which was a customer of the Company within the past sixty
(60) days in each case as of the end of the Employment Period, as evidenced by
the records of the Company or its subsidiaries.
(b) Confidentiality. During and after the Employment Period, the
Employee shall not, except as may otherwise be required by law, directly or
indirectly disclose to any person or entity, or use or cause to be used in any
manner adverse to the interests of the Company or any subsidiary thereof, any
Confidential Information (as defined below). The Employee agrees that, upon the
termination or expiration of the Employment Period, all tangible Confidential
Information and Company property and duplicates thereof in the possession or
control of the Employee, in any form or format, shall forthwith be returned to
the Company and shall not be retained by the Employee or furnished or
communicated to any third party in any form whatsoever. Prior to any disclosure
of Confidential Information required by law, the Employee shall provide prompt
notice thereof to the Company's General Counsel so as to allow the Company to
seek appropriate injunctive relief and shall reasonably assist the Company in
its efforts to limit such disclosure. The Employee further acknowledges and
agrees to abide by his continuing obligation to not make use of any material
non-public information with respect to the Company in a manner violative of
applicable securities laws.
As used in this Section 8(b), the term "Confidential Information" shall
mean the following: (i) information disclosed to the Employee or known by the
Employee as a consequence of the Employee's relationship with the Company or any
subsidiary thereof, not generally known in the industry of the Company's (or a
subsidiary's) business, about the Company's or a subsidiary's business,
employees, customers, directors, officers, partners, or shareholders; sales or
marketing methods; business plans, methods and forecasts; customer, prospect and
vendor lists; finances; or trade marks, trade secrets and other intellectual
property, including without limitation, material non-public information about
the Company's operations or business; and (ii) information disclosed to the
Employee or known by the Employee as a consequence of the Employee's
relationship with the Company or any subsidiary thereof, not generally known in
the businesses in which the customers of the Company or its subsidiaries are or
may be engaged, about the business, products, processes, trade information and
services of any such customer.
13
(c) Severability. The invalidity or unenforceability of this Section 8
in any respect shall not affect the validity or enforceability of this Section 8
in any other respect, or of any other provision of this Agreement. In the event
that any provision of this Section 8 shall be held invalid or unenforceable by a
court of competent jurisdiction by reason of the geographic or business scope or
the duration thereof or for any other reason, such invalidity or
unenforceability shall attach only to the particular aspects of such provision
found invalid or unenforceable as applied and shall not affect or render invalid
or unenforceable any other provision of this Section 8 or the enforcement of
such provision in other circumstances, and, to the fullest extent permitted by
law, this Section 8 shall be construed as if the geographic or business scope or
the duration of such provision or other basis on which such provision has been
challenged had been more narrowly drafted so as not to be invalid or
unenforceable, so that the Agreement is construed broadly so as to capture as
much of the original intent as possible.
9. BUSINESS OPPORTUNITIES. During the Covered Period and in accordance with
Employee's obligations under applicable law, the Employee agrees to bring all
business opportunities to the Company relating to or otherwise associated with
the business or businesses conducted by the Company or a subsidiary during the
Employment Period, and any businesses reasonably related thereto.
10. RIGHTS TO WORK PRODUCT. The Employee agrees that all work performed by
the Employee pursuant hereto shall be the sole and exclusive property of the
Company, in whatever stage of development or completion. During the Employment
Period, the Employee will disclose to the Company all ideas, concepts,
inventions, product ideas, new products, discoveries, methods, software,
business plans and business opportunities developed by him during working time
through the use of Company resources, which relate directly or indirectly to the
Company's business or the business of any of its subsidiaries or their
respective clients, including without limitation, any process, product or
product improvement, product ideas, new products, discoveries, methods or
software which may or may not be patentable or copyrightable, and any trade
names, trademarks or slogans. With respect to any copyrightable works prepared
in whole or in part by the Employee pursuant to this Agreement, including
compilations of lists or data, the Employee agrees that all such works will be
prepared as "work-for-hire" within the meaning of the Copyright Act of 1976, as
amended (the "Act"), of which the Company shall be considered the "author"
within the meaning of the Act. In the event (and to the extent) that such works
or any part or element thereof is found as a matter of law not to be a
"work-for-hire" within the meaning of the Act, the Employee hereby assigns to
the Company the sole and exclusive right, title and interest in and to all such
works, and all copies of any of them, without further consideration, and agrees,
to the extent reasonable under the circumstances, to cooperate with the Company
to register, and from time to time to enforce, all patents, copyrights and other
rights and protections relating to such works in any and all countries. To that
end, the Employee agrees to execute and deliver all documents requested by the
Company in connection therewith, and the Employee hereby irrevocably designates
and appoints the Company as the Employee's agent and
14
attorney-in-fact (and affords the Company an irrevocable proxy, coupled with an
interest) to act for and on behalf of the Employee and in the Employee's stead
to execute, register and file any such applications, and to do all other
lawfully permitted acts to further the registration, protection and issuance of
patents, copyrights or similar protections with the same legal force and effect
as if executed by the Employee. The Company shall reimburse the Employee for all
reasonable and documented costs and expenses incurred by the Employee pursuant
to this Section 10.
11. NO DISPARAGING STATEMENTS. The Employee and the Company mutually agree
that the Employee and the Company's officers, directors and human resources
personnel shall refrain from making any disparaging statements, either orally or
in writing, about the other party, any subsidiary of the Company, or about any
directors, officers, shareholders, commercial partners, employees, agents or
other representatives of the Company or any subsidiary thereof. The foregoing
shall not restrict the Company from disclosing to third parties the Employee's
termination of employment with the Company or, where appropriate, the
circumstances thereof.
12. INJUNCTIVE RELIEF. The Employee acknowledges and agrees that the
Company and its subsidiaries are engaged in a highly competitive business and
that the protections of the Company and each such subsidiary set forth in
Sections 8, 9, 10 and 11 of this Agreement are fair and reasonable and are of
vital concern to the Company and its subsidiaries. Further, the Employee
acknowledges and agrees that monetary damages for any violation of Sections 8,
9, 10 or 11 will not adequately compensate the Company and its subsidiaries with
respect to any such violation. Therefore, in the event of a breach by the
Employee of any of the terms and provisions contained in Sections 8, 9, 10 or 11
of this Agreement, the Company (and/or its affected subsidiaries) shall be
entitled to institute legal proceedings to obtain damages for any such breach
and/or to enforce the specific performance of this Agreement by the Employee and
to enjoin the Employee from any further violations. The remedies available to
the Company and its subsidiaries pursuant to this Section 12 may be exercised
cumulatively by the Company (and its subsidiaries) in conjunction with all other
rights and remedies provided by law. The Employee agrees that the provisions of
this Section 12, and the provisions of Sections 8, 9, 10 and 11, shall survive
the termination or expiration of this Agreement and the termination or
expiration of the Employee's employment with the Company, regardless of how the
Employee's employment may be or has been terminated.
13. REPRESENTATIONS. The Employee represents and warrants to the Company
that the execution and delivery by the Employee of this Agreement and the
performance by the Employee of his obligations hereunder will not, with or
without the giving of notice and/or the passage of time, (i) violate any
judgment, writ, injunction or order of any court, arbitrator or governmental
agency applicable to the Employee, or (ii) conflict with, result in the breach
of any provision of or the termination of, or constitute a default under, any
agreement to which the Employee is a party or by which the Employee is or may be
bound. The Employee agrees to indemnify and hold harmless the Company
15
from any liability, damage, expense, judgment or claim incurred, entered or made
against the Company arising from a breach by the Employee of any representation,
warranty or covenant under this Section 13, including all documented expenses
and reasonable fees of counsel, incurred or paid by the Company in connection
with the foregoing.
14. MISCELLANEOUS.
(a) Governing Law; Disputes. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Connecticut without regard to its conflicts of law principles.
Actions to enforce this Agreement shall be brought only in a state or federal
court located in the State of Connecticut. Each party irrevocably (a) submits to
the personal jurisdiction of such courts and waives any objection to the laying
of venue therein or any inconvenient forum, (b) consents to service of process
at the address given under Section 14(e) hereof, and (c) waives any other
requirement (whether imposed by statute, rule of court, or otherwise) with
respect to personal jurisdiction or service of process. The Company shall not be
deemed in violation or breach of this Agreement as a result of any action or
inaction on the part of the Company which was authorized or directed by the
Employee.
(b) Payment of Legal Fees. The Company shall reimburse Employee for
documented legal fees incurred by him in connection with the execution and
negotiation of this Agreement up to a maximum of $15,000 (or such greater amount
as may be approved by the Board of Directors).
(c) No Mitigation. The Company agrees that, if the Employee's
employment is terminated during the term of this Agreement, the Employee is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Employee by the Company. Further, the amount of any payment
provided hereunder shall not be reduced by any compensation earned by the
Employee. Notwithstanding the foregoing, the Company may suspend payment of any
severance payments due Employee under this Agreement in the event that the Board
of Directors reasonably determines that Employee has violated the provisions of
Sections 8 through 11, inclusive, of this Agreement during the Covered Period;
provided, however, if such determination is subsequently shown to be incorrect
the suspended payments shall be promptly paid to the Employee together with
interest thereon at a rate of 10% per annum.
(d) Modification; Waiver; Discharge; Offer of Employment. No provision
of this Agreement may be modified, amended, waived or discharged unless such
waiver, modification, amendment or discharge is agreed to in writing and signed
by the Employee and a duly authorized representative of the Company other than
the Employee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. Until signed by both parties hereto, this Agreement
16
represents a non-binding offer of employment only, and shall be revocable by
either party hereto upon notice to the other party.
(e) Notices. All notices and other communications provided for
hereunder shall be in writing and shall be delivered to each party hereto by
personal delivery, by priority overnight delivery sent via a nationally
recognized courier (charges for the account of sender), by facsimile
transmission or by registered or certified U.S. mail, return receipt requested,
addressed as follows:
if to the Company, to:
XXX.xxx, Inc.
000 Xxxx Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chairman
Facsimile: 000-000-0000
Telephone: 000-000-0000
with a copy to each of the Company's Chief Operating
Officer and General Counsel, at the above address, and,
if to the Employee, to:
Xxxxx X. Xxxxxx
c/o XXX.xxx, Inc.
000 Xxxx Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
with a copy to each of:
Xxxx Xxxxxxx LLP
0000 Xxxxxx Xxxxxxxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
and the Employee at the Employee's
latest residence address most recently
on file with the Company,
or to such other address as either party may specify by notice to the other
party given as aforesaid. Such notices shall be deemed to be effective five (5)
business days after the same shall have been deposited, postage prepaid, in the
U.S. mail, upon personal delivery, if the same shall have been delivered by
hand, one (1) business day after deposit with such overnight courier, if sent
via priority overnight delivery, or upon receipt of electronic
17
facsimile confirmation, as the case may be. As used herein, a "business day"
shall mean any weekday other than a federal U.S. holiday.
(f) Assignment. This Agreement may not be assigned by the Employee.
This Agreement shall be binding upon and inure to the benefit of the Employee,
the Company, and the Company's successors and assigns. Any assignment in
contravention of this Section 14(f) shall be null and void.
(g) Integration. This Agreement and the documents and instruments
contemplated hereby (the "Ancillary Agreements") set forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
therein and supersedes all prior and contemporaneous conflicting agreements,
promises, covenants, arrangements, understandings, communications,
representations or warranties, whether oral or written, by any party hereto (or
representative of either party hereto). No agreements or representations,
whether written, oral, express or implied, with respect to the subject matter
hereof have been made by either party that are not set forth expressly in this
Agreement or the Ancillary Agreements. In the event of a conflict between this
Agreement and any other agreement between the parties, this Agreement shall
prevail to the limited extent of the specific subject matter of the conflict.
Nothing herein shall modify or reduce any obligations of the Employee under any
separate agreement between the Employee and the Company.
(h) Invalidity. If any provision of this Agreement shall be determined
by any court of competent jurisdiction to be unenforceable or invalid to any
extent, the remainder of this Agreement shall not be affected thereby, and this
Agreement shall be construed to the fullest extent possible so as to give effect
to the intentions of the provision found unenforceable or invalid.
(i) Headings. All headings contained in this Agreement are for
reference purposes only and shall not in any way effect the meaning or
interpretation of any provision or provisions of this Agreement.
(j) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
(k) Survival. This Agreement shall terminate upon the termination of
the Employee's employment with the Company for any reason; provided, however,
that the provisions of Sections 6(c), 6(f), 7, 8, 9, 10, 11, 12, 13, and 14
hereof (and any other operative provisions of this Agreement which, by logical
context, are necessary to interpret and enforce this Agreement so as to give
effect to the parties' intent) shall survive the termination of this Agreement
or the Employee's employment with the Company hereunder.
18
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below, effective as of the Effective Date.
XXX.xxx, Inc.:
By: /s/ J. Xxxxx Xxxxxxx
------------------------------------
Name: J. Xxxxx Xxxxxxx
Title: President
Date: April 15, 2004
EMPLOYEE:
/s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Date: April 15, 2004
19
Exhibit A
XXX.xxx, Inc.
STOCK OPTION AGREEMENT
1. GRANT OF OPTION.
XXX.xxx, Inc., a Delaware corporation (the "Company"), hereby grants to
Xxxxx X. Xxxxxx (the "Employee") an option to purchase an aggregate of
10,000,000 shares (the "Shares") of Common Stock, par value $.0005 per share
("Common Stock"), of the Company at an exercise price per share equal to the
closing price of the Company's Common Stock on the last trading day prior to the
Employee's initial date of hire with the Company (i.e., the "Effective Date"
under that certain Employment Agreement between the Company and the Employee,
dated as of April 15, 2004), as listed on the Nasdaq SmallCap Market,
purchasable as set forth in and subject to the terms and conditions of this
option agreement. The original date of grant of this option is April 15, 2004,
and is hereinafter referred to as the "Original Grant Date," and the date ending
one hundred and twenty (120) months thereafter is herein referred to as the
"Tenth Anniversary Date."
2. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION.
(a) Except as otherwise provided herein and subject to the right of
cumulation provided herein, this option may be exercised, prior to
the Tenth Anniversary Date, as to not more than the following number
of shares covered by this option during the respective periods set
forth as follows: (i) no Shares prior to October 15, 2004, (ii)
16.6% of the Shares from and after October 15, 2004, and (iii) an
additional 2.78% of the Shares on each monthly anniversary of such
date thereafter, until fully vested, provided, however, that in the
event there is no corresponding monthly anniversary date in any
given month, such additional amount shall vest on the last day of
such month (i.e., February 29 would correspond to January 31).
(b) Notwithstanding anything herein to the contrary, (i) in the
event that Employee's employment with the Company is terminated
either by the Company without Cause or by the Employee for Good
Reason, then the portion of the option granted hereunder which would
otherwise vest or become exercisable pursuant to this Section 2(a)
within twelve (12) months following the date of such termination
shall immediately vest and become fully exercisable; and (ii) in the
event that Employee's employment with the Company is terminated
either by the Company without Cause or by the Employee for Good
Reason at any time following the consummation of a Change in
Control, any unvested portion of the option granted to the Employee
hereunder shall immediately vest and become fully exercisable. As
used herein, the terms "Cause", "Good Reason" and "Change in
1
Control" shall have the meanings set forth in the Employment
Agreement executed herewith between Employee and the Company
effective as of April 15, 2004 (the "Employment Agreement").
(c) The right of exercise provided herein shall be cumulative so
that if the option is not exercised to the maximum extent
permissible during any period it shall be exercisable, in whole or
in part, with respect to all shares not so purchased at any time
during any subsequent period prior to the expiration or termination
of this option. This option may not be exercised at any time after
the Tenth Anniversary Date.
(d) Subject to the conditions hereof, this option shall be
exercisable by the Employee giving written notice of exercise to the
Company, specifying the number of shares to be purchased and the
purchase price to be paid therefor and accompanied by payment in
accordance with Section 3 hereof. Such exercise shall be effective
upon receipt by the Treasurer of the Company of the written notice
together with the required payment. The Employee shall be entitled
to purchase less than the number of shares covered hereby, provided
that no partial exercise of this option shall be for less than 10
whole shares.
(e) If the Employee ceases to be employed by the Company or one of
its subsidiaries for any reason, including retirement but other than
death, this option shall immediately terminate; provided, however,
that any portion of this option which was otherwise exercisable on
the date of termination of the Employee's employment may be
exercised within the three-month period following the date on which
the Employee ceased to be so employed; provided, further, that if
the Employee's employment with the Company was terminated by the
Company for a reason other than Cause or by the Employee for Good
Reason, any portion of this option which was otherwise exercisable
on the date of termination of the Employee's employment (including
the portions that have been accelerated pursuant to Section 2(b))
may be exercised within the one-year period following such
termination of employment, but in no event after the Tenth
Anniversary Date. Any such exercise may be made only to the extent
of the number of shares subject to this option which are purchasable
upon the date of such termination of employment (including the
portions that have been accelerated pursuant to Section 2(b)). If
the Employee dies during such three-month or one year period, as the
case may be, this option shall be exercisable by the Employee's
personal representatives, heirs or legatees to the same extent and
during the same period that the Employee could have exercised this
option on the date of his or her death.
(f) If the Employee dies while an employee of the Company or any
subsidiary of the Company, this option shall be exercisable, by the
Employee's personal representatives, heirs or legatees, to the same
extent that the Employee could have exercised this option on the
2
date of his or her death. This option or any unexercised portion
hereof shall terminate unless so exercised prior to the earlier of
the expiration of six months from the date of such death or the
Tenth Anniversary Date.
3. PAYMENT OF PURCHASE PRICE.
(a) Payment of the purchase price for shares purchased upon exercise
of this option shall be made by one or any combination of the
following forms of payment:
(i) by delivery to the Company of cash or check payable
to the order of the Company in an amount equal to the
purchase price of such shares;
(ii) if the Employee elects and the Company permits,
subject to Section 3(b) below, by delivery of shares of
Common Stock of the Company having a fair market value
equal in amount to the purchase price of such shares; or
(iii) if the Employee elects and the Company permits,
and the Common Stock is then traded on a national
securities exchange or on the Nasdaq National Market or
Nasdaq SmallCap Market (or successor trading system
thereof), by delivery of an irrevocable and
unconditional undertaking, satisfactory in form and
substance to the Company, by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the Employee to the
Company of a copy of irrevocable and unconditional
instructions, satisfactory in form and substance to the
Company, to a creditworthy broker to deliver promptly to
the Company cash or a check sufficient to pay the
exercise price.
(b) If Section 3(a)(ii) is applicable, and if the Employee delivers
Common Stock held by the Employee ("Old Stock") to the Company in
full or partial payment of the exercise price and the Old Stock so
delivered is subject to restrictions or limitations imposed by
agreement between the Employee and the Company, an equivalent number
of Shares shall be subject to all restrictions and limitations
applicable to the Old Stock to the extent that the Employee paid for
the Option Shares by delivery of Old Stock, in addition to any
restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Employee may not pay any part of
the exercise price hereof by transferring Common Stock to the
Company unless such Common Stock has been owned by the Employee free
of any substantial risk of forfeiture for at least six months.
(c) For the purposes of Section 3(a)(ii) hereof, the fair market
value of any share of the Company's Common Stock to be delivered to
the Company in exercise of this option shall be determined as of the
last business day for which such prices or quotes are available
3
prior to the date of exercise and shall mean (i) the last reported
sale price (on that date) of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange;
(ii) the last reported sale price (on that date) of the Common Stock
on the Nasdaq National Market or Nasdaq SmallCap Market (or
successor trading system thereof), if the Common Stock is not then
traded on a national securities exchange; or (iii) if the stock is
not then traded on a national securities exchange or listed on the
Nasdaq National Market or Nasdaq SmallCap Market (or successor
trading system thereof), the fair market value as determined in good
faith by the Board of Directors of the Company.
(d) If the Employee elects to exercise options by delivery of shares
of Common Stock of the Company, the certificate or certificates
representing the shares of Common Stock of the Company to be
delivered shall be duly executed in blank by the Employee or shall
be accompanied by a stock power duly executed in blank suitable for
purposes of transferring such shares to the Company. Fractional
shares of Common Stock of the Company will not be accepted in
payment of the purchase price of shares acquired upon exercise of
this option.
4. DELIVERY OF SHARES.
The Company shall, upon payment of the purchase price for the number of
shares purchased and paid for, make (or cause to be made) prompt delivery of
such shares to the Employee, provided that if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action. No shares shall be issued and
delivered upon exercise of any option unless and until, in the opinion of
counsel for the Company, any applicable registration requirements of the
Securities Act of 1933, any applicable listing requirements of any national
securities exchange or over-the-counter market on which stock of the same class
is then listed, and any other requirements of law or of any regulatory bodies
having jurisdiction over such issuance and delivery, shall have been fully
complied with.
5. NON-TRANSFERABILITY OF OPTION.
Except as provided in Section 2(c) and 2(d) hereof, this option is personal
and no rights granted hereunder shall be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) nor shall any
such rights be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
option or of such rights contrary to the provisions hereof, or upon the levy of
any attachment or similar process upon this option or such rights, this option
and such rights shall become null and void.
4
6. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any of its subsidiaries to
continue the employment of the Employee for the period within which this option
may be exercised.
7. RIGHTS AS A STOCKHOLDER.
The Employee shall have no rights as a stockholder with respect to any
shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such shares are duly issued and
delivered to the Employee. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.
8. RECAPITALIZATION.
In the event that dividends are payable in shares of Common Stock or in the
event there are splits, sub-divisions or combinations of shares of Common Stock
subsequent to the date hereof, the number of shares subject to this option shall
be increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of this option shall be
increased or decreased proportionately, as the case may be, without change in
the aggregate purchase price.
9. REORGANIZATION.
In case the Company is merged or consolidated with another corporation or
entity and the Company is not the surviving corporation, or in case the property
or stock of the Company is acquired by any other corporation, or in case of a
reorganization or liquidation of the Company, prior to the termination or
expiration of this option, the Employee shall, with respect to this option or
any unexercised portion thereof, be entitled to the rights and benefits, and be
subject to the limitations, set forth in Section 2 hereof.
10. WITHHOLDING TAXES.
Whenever shares are to be issued upon exercise of this option, the Company
shall have the right to require the Employee to remit cash to the Company in an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares.
5
11. MISCELLANEOUS.
(a) Except as provided herein, this Agreement may not be amended or
otherwise modified unless evidenced in writing and signed by the
Company and the Employee.
(b) All notices under this Agreement shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath
their names below or at such other address as may be designated in
writing by either of the parties to one another.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
Dated: XXX.xxx, Inc.
-------------------
By:
----------------------------------
Name:
Title:
Address: 000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
6
EMPLOYEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions thereof.
EMPLOYEE
-----------------------------------
Signature
Xxxxx X. Xxxxxx
7
Exhibit B
RELEASE AND WAIVER
------------------
This Release and Waiver (this "Release"), dated as of ________________ ___,
_______, is entered into by and between _________________________________, an
individual residing at __________________________________________ ("Employee"),
and XXX.xxx, Inc., a Delaware corporation having a principal place of business
at 000 Xxxx Xxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxxx, XX 00000 (the "Company").
W I T N E S S E T H:
WHEREAS, Employee has heretofore been employed by the Company, pursuant to
an Employment Agreement, entered into on or about April 15, 2004, by and between
Employee and the Company (the "Employment Agreement");
WHEREAS, Employee's employment with the Company has been terminated (or
being terminated commensurate herewith) as of the date hereof;
WHEREAS, as a condition to the payment to Employee of certain payments and
benefits described in the Employment Agreement, the Employment Agreement
requires that Employee execute and deliver this Release in favor of the Company;
NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants set forth herein, Employee and the Company agree as follows:
1. RELEASE BY EMPLOYEE. In exchange for the Company's payment or furnishing
to Employee of certain severance under, and as described in, the Employment
Agreement, which is conditioned upon the execution and delivery of this Release
by the Employee, without revocation (the "Severance"), Employee hereby
knowingly, irrevocably and unconditionally releases, waives, and forever
discharges the Company, its parents, affiliates, subsidiaries, divisions,
predecessors, successors and assigns, together with its and their respective
agents, attorneys, directors, employees, officers, representatives,
stockholders, successors and assigns (collectively, the "Released Parties"),
from any and all actions or causes of action, suits, claims, charges,
complaints, promises, demands and contracts (whether oral or written, express or
implied from any source) of any nature whatsoever, known or unknown, suspected
or unsuspected ("Claim"), which against the Released Parties, Employee or any of
Employee's heirs, executors, administrators, successors or assigns ever had, now
has or hereafter can, shall or may have by reason of any matter, cause or thing
whatsoever arising from the beginning of time to the date Employee executes this
Agreement and any and all rights or claims relating in any way to the
termination of Employee's employment with the Company, including, but not
limited
to, any rights or claims: (a) relating in any way to Employee's employment with
the Company; (b) arising under any statute or regulation including, but not
limited to, the Age Discrimination in Employment Act, as amended by the Older
Workers Benefit Protection Act (the "ADEA"), the National Labor Relations Act,
Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Employee Retirement Income Security Act of 1974, the Americans With Disabilities
Act of 1990, the Fair Labor Standards Act, the Occupational Safety and Health
Act, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Federal
Family and Medical Leave Act of 1993, the Equal Pay Act and the Worker
Adjustment and Retraining Notification Act, each as amended, Connecticut state
or local laws respecting employment, including but not limiting to, the
Connecticut Fair Employment Practices Act, the Connecticut Workers' Compensation
Act, the Connecticut Family and Medical Leave Act, Connecticut's drug testing
laws, Connecticut's "whistleblower" statutes, Connecticut's aids testing and
medical information laws, and Connecticut's laws regulating smoking in the
workplace and the electronic monitoring of employees; or (c) arising under any
other alleged violation of any other federal, state or local law, including
civil or human rights law, ordinance, regulation and/or public policy, implied
or expressed contract, fraud, negligence, estoppel, defamation, infliction of
emotional distress or other tort or common-law claim and allegations for costs,
fees or other expenses, including reasonable attorney's fees, incurred in
connection with any of the matters released in this Section 1; provided,
however, the foregoing release shall not extinguish the Company's obligations
and the Employee's rights under the surviving provisions of the Employment
Agreement as set forth in Section 14(k) thereof or the Stock Option Agreement
granted as of April 15, 2004.
2. SETTLEMENT OF AMOUNTS DUE. Except for the Company's obligations under
the surviving provisions of the Employment Agreement as set forth in Section
14(k) thereof or the Stock Option Agreement granted April 15, 2004 and any stock
option agreement by and between Employee and Company dated after April 15, 2004,
Employee accepts the Severance set forth in the Employment Agreement, together
with any payments and benefits previously provided by the Company to him, as
full, complete and unconditional payment, settlement, accord and/or satisfaction
of any and all obligations and liabilities of the Released Parties to Employee,
and with respect to all Claims that could be asserted by Employee against the
Released Parties arising out of Employee's employment and/or other relationship
with the Company, its subsidiaries and/or affiliates, or any change in and/or
cessation of such employment or relationship, including, without limitation, any
and all Claims for wages, salary, vacation pay, compensation, draws, incentive
pay, bonuses, stock, stock options, deferred compensation, commissions,
severance pay, attorney's fees, ownership or equity interests in the Company,
exemplary damages or other benefits, costs or sums.
3. DENIAL OF ADMISSION OF LIABILITY. Employee acknowledges that this
Release does not constitute an admission or concession by any Released Party of
any liability or of any violation of any law in any jurisdiction on account of
any of the Claims of Employee which may have existed up to the date hereof.
4. FORFEITURE OF SEVERANCE. Employee acknowledges and agrees that the
Severance is being provided by the Company as consideration for the execution of
this Release, and that he is not otherwise entitled to the Severance. Therefore,
Employee waives his right to the consideration of the Severance and agrees that
he will return to the Company the Severance if he makes or files any Claim
released under the provisions of this Release, or materially breaches any other
terms and conditions of this Release or the Employment Agreement, or revokes
this Release pursuant to Section 7 hereof (except to the extent application of
the foregoing clause would invalidate any waiver given hereunder). Employee
recognizes and agrees that any waiver of his right to the Severance provided by
the Company under the Employment Agreement shall not limit in any way the
Company's ability to enforce any of its rights under the Employment Agreement,
this Release or applicable law.
5. COOPERATION BY EMPLOYEE. Employee covenants and agrees to fully
cooperate with the reasonable requests of any of the Released Parties in the
defense or prosecution of any claims or actions which relate to the business
conducted by the Released Parties during such time as Employee was employed by
the Company. Employee also shall cooperate fully with the Released Parties in
connection with any investigation or review of any federal, state or local
regulatory authority, as any such investigation or review relates to events or
occurrences that transpired while Employee was employed by the Company.
6. ADVICE OF COUNSEL. Employee has been advised to seek counsel of his own
choosing, he has had an opportunity to do so prior to executing this Release and
he acknowledges that he has signed this Release knowingly, freely and
voluntarily.
7. ADEA. Since Employee is forty (40) years of age or older, Employee is
being informed that Employee has or may have specific rights and/or claims under
the Age Discrimination in Employment Act, as amended by the Older Workers
Benefit Protection Act (the "ADEA"). In connection with the ADEA, (a) Employee
agrees that in consideration for the Severance described in the Employment
Agreement, which Employee is not otherwise entitled to receive, Employee
specifically and voluntarily waives such rights and/or claims under the ADEA
which Employee might have against the Released Parties to the extent such rights
and/or claims arose prior to the date this Release was executed, (b) Employee
understands that rights or claims under the ADEA which may arise after the date
this Release is executed are not waived by Employee, (c) Employee acknowledges
and agrees that he has been advised that Employee has at least twenty-one (21)
days within which to consider the terms of this Release and to consult with or
seek advice from an attorney of Employee's own choice or any other person of
Employee's choosing prior to executing this Release, and that the 21-day review
period will not be affected or extended by any revisions, whether material or
immaterial, that might be made to this Release, (d) Employee has carefully read
and fully understands all of the provisions of this Release, and knowingly and
voluntarily agrees to all of the terms set forth in this Release, and (e)
Employee acknowledges that in entering into this Release, Employee is
not relying on any representation, promise or inducement made by the Company or
its attorneys with the exception of those promises described in this Release. By
signing below, Employee acknowledges and agrees that he has been given a period
of at least twenty-one (21) days within which to consider, execute and deliver
this Release.
Employee acknowledges and agrees that he may revoke this Release at any
time up to and including the seventh (7th) day after his execution hereof. Any
such revocation must be received in writing by the Company by 5:00 p.m. Eastern
Time on the date ending said revocation period. If revoked, this Release shall
be null and void in its entirety. This Release shall not be enforceable or
effective until the expiration of the foregoing 7-day period.
8. MISCELLANEOUS. This Agreement shall bind, and shall inure to the benefit
of, the parties' respective heirs, executors, guardians, trustees,
administrators, successors, assigns and legal representatives. This Release may
not be amended or terminated (subject to Section 7 of this Release) except by a
written instrument executed by the parties hereto. This Release may be executed
in counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument. Should any of the
provisions of this Release be declared or determined by any court to be illegal
or invalid, the validity of the remaining parts, terms or provisions shall not
be affected thereby and the illegal or invalid part, term or provision shall not
be deemed to be part of this Release. This Release shall be governed by the laws
of the State of Connecticut without regard to its conflicts of law rules. Any
action or proceeding against any party to this Release relating in any way to
this Release shall be brought only in the state or federal courts located in the
State of Connecticut, and each party to this Release irrevocably (i) submits to
the jurisdiction of each such court in respect of any such action or proceeding,
(ii) consents to service of process at the address given in the preamble to this
Agreement, above, or such other address as either party shall have notified the
other of, in writing (which, for the Company, may include such revised corporate
address as shall be posted on the Company's Web site (xxx.xxx.xxx, or such
successor site) or otherwise publicly disclosed, generally), (iii) waives the
right to a jury trial in connection with any legal proceeding relating to this
Release (except to the extent application of this clause (iii) would invalidate
any waiver given hereunder), and (iv) waives any other requirement (whether
imposed by statute, rule of law or otherwise) with respect to personal
jurisdiction or service of process for the limited and specific purpose of
prosecuting and/or defending any action regarding the construction and/or
enforcement of this Release or otherwise relating to the matters covered by this
Release. Each party to this Release irrevocably waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter have to
the laying of venue of any such action or proceeding in the aforementioned
courts for the limited purposes described herein, and any claim that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum. Section headings herein are for reference purposes only and
the language thereof shall not be afforded any interpretative intent. This
Release sets forth the entire agreement of the parties and supersedes all prior
and contemporaneous conflicting agreements, promises, covenants, arrangements,
understandings, communications, representations or warranties, whether oral or
written, by any party hereto (or representative of either party hereto); except
for (i) the Stock Option Agreement; (ii) any stock option agreement pertaining
to stock options granted to Employee after April 15, 2004; and (iii) the
surviving provisions of the Employment Agreement as described in Section 14(k)
thereto.
IN WITNESS WHEREOF, the parties have caused this Release to be executed and
delivered on the dates set forth below, effective as of the date first above
written.
XXX.xxx, Inc.
By:___________________________
Name: _______________________
Title: ______________________
Date: _______________________
______________________________
Name: _______________________
Date:_________________________
