EXHIBIT 10.27
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT (the "Agreement"), effective as of the first of June
1998, between Prodigy Services Corporation, a Delaware corporation (the
"Company") and an indirect wholly-owned subsidiary of Prodigy, Inc. (the
"Parent"), with its principal place of business at 00 Xx. Xxxxxxxx, Xxxxx
Xxxxxx, Xxx Xxxx 00000, and Xxxxxx X. Pooth, residing at XX0 Xxx 00, Xxxxxxxxx,
XX 00000, (the "Executive").
WHEREAS, the Company desires to employ the Executive as Senior Vice
President of the Company, and the Executive desires to be employed in that
capacity;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment.
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The Company hereby agrees to employ the Executive, and the Executive hereby
accepts employment with the Company, upon the terms set forth in this Agreement,
for the period commencing on June 1, 1998 (the "Commencement Date"), and ending
on May 31, 2000 (the "Employment Period"), unless sooner terminated in
accordance with the provisions of Section 4.
2. Title; Capacity.
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The Executive shall serve as Senior Vice President of the Company.
Effective August 1, 1998, the Executive shall serve as Executive Vice President
of the Company, reporting to the Chief Executive Officer. The Executive shall be
based in White Plains, New York or such other place within the greater New York
metropolitan area as the Board of Directors of the Company (the "Board") shall
determine. The Executive shall report to and be subject to the supervision of,
and shall have such authority as is delegated to Executive by the President and
Chief Executive Officer of the Company or Parent (the "President"), or such
other senior executive as the President shall designate.
The Executive hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position, and such other duties and
responsibilities as the President shall from time to time reasonably assign to
the Executive. The Executive shall devote Executive's entire business time,
attention and energies to the business and interests of the Company during the
Employment Period. The Executive shall abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company.
The Executive shall exercise best efforts to identify and engage a
qualified person to fill each of the newly created roles of Senior Vice
President, Product Development, and Vice President, Project Development. In
selecting these employees, Executive shall seek individuals who, in her best
judgement, will each have the capacity to assume Executive's role, in the event
her employment relationship should terminate. Executive acknowledges that, as of
September 1, 1998, recruiting for these positions has begun. Executive shall
also identify all critical talent and functions not readily replaced from within
her organization, and exercise best efforts to hire individuals, within
headcount restrictions, who may provide such talent and functions, should
existing talent leave the Company's employ.
3. Compensation and Benefits.
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3.1 Salary. The Company shall pay the Executive, in accordance with its
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normal payroll practices, an annual base salary of $175,000 commencing on
the Commencement Date. Such salary shall be subject to increase (but not
decrease) thereafter as determined by the Board. Such salary was increased
to $190,000 annually on August 1, 1998.
3.2 Performance Bonuses. The Executive shall be eligible to receive up to
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50% of her annual base salary as a performance bonus during each calendar
year of the Employment Period with any partial calendar year of employment
subject to pro rata adjustment. For calendar year 1998, bonuses shall be
paid based upon the Executive's duration of employment during the calendar
year, without regard to the commencement date of this Agreement. During
each such year, 50% of such bonus shall be contingent upon the successful
completion of personal goals as mutually agreed between the Executive and
the President, and 50% of such bonus shall be contingent upon the
successful completion of corporate goals as determined by the Company. Such
performance bonus shall be determined and paid within 45 days after the end
of each such calendar year during the Employment Period. Further, the
Executive does not have to be employed by the Company beyond the last day
of the applicable year in order to be eligible to receive a bonus payment.
3.3 Option Grant.
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(a) On July 12, 1996, the Parent granted the Executive a stock
option to purchase 20,000 shares of common stock of the Parent at an
exercise price of $3.00 per share, vesting in four (4) equal annual
installments, with the first vesting to occur on the first anniversary of
the grant date. On December 5, 1996, the Parent granted the Executive a
stock option to purchase 9,000 shares of common stock of the Parent at an
exercise price of $3.00 per share, vesting in three (3) equal annual
installments, with the first vesting to occur on July 12, 1997. On August
1, 1997, the Parent granted the Executive a stock option to purchase 71,000
shares of common stock of the Parent at an exercise price of $3.00 per
share, vesting in five (5) annual installments, with the first vesting to
occur on July 12, 1997. On January 26, 1998, the Parent granted the
Executive a stock option to purchase 275,000 shares of common stock of the
Parent at an exercise price of $2.00 per share, vesting in three (3) equal
annual installments, with the first vesting to occur on the first
anniversary of the grant date. The parties acknowledge that the exercise
price of all stock options referred to in this Section 3.3 has been reduced
to $1.00 per share.
(b) The Executive, if requested by the Parent and the managing
underwriter of the initial public offering of the Parent's securities (the
"IPO"), shall not sell publicly or otherwise transfer or dispose of any
securities of the Parent held by the Executive for a specified period of
time (not to exceed 270 days), following the effective date of the
registration statement for the IPO; provided that all then executive
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officers, directors and holders of 5% or more of the outstanding stock of
the Parent enter into similar agreements. The Executive acknowledges that
no representations have been made to her concerning the size, occurrence,
valuation or timing of any IPO.
3.4 Acceleration of Vesting Schedule. If there is a change of control of
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the Parent, pursuant to which one single person or entity has control of
the Parent (as control is understood under the Internal Revenue Code or
securities laws of the US), in 1998, the vesting schedule on all options
previously granted to the Executive will be accelerated so that a total of
50% of the Executive's options will be vested on the effective date of such
merger or acquisition. The vesting schedule shall thereafter remain the
same so that the remaining shares vest without giving effect to the shares
which vested on an accelerated basis.
3.5 Vacation. The Executive shall be entitled to four (4) weeks annual
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vacation, to be taken at times selected by the Executive and reasonably
acceptable to the President. Unused vacation shall accrue from year to
year only to the extent permitted under the Company's vacation policies in
effect from time to time
3.6 Fringe Benefits. The Executive shall be entitled to participate in all
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fringe benefit programs that the Company establishes and makes available to
its employees from time to time to the extent that Executive's position,
tenure, salary, age, health and other qualifications make her eligible to
participate.
3.7 Reimbursement of Expenses. The Company shall reimburse the Executive
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for all reasonable travel, entertainment and other expenses incurred or
paid by the Executive in connection with the performance of her duties
hereunder, upon presentation by the Executive of documentation, expense
statements, vouchers and/or such other supporting information as the
Company may request; provided, however, that the nature and amount of such
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expenses shall be subject to the Company's expense policies as in effect
from time to time.
4. Employment Termination.
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The employment of the Executive pursuant to this Agreement shall terminate
upon the occurrence of any of the following:
4.1 At the election of the Company, for Cause (as hereinafter defined)
immediately upon written notice by the Company to the Executive. For
purposes of this Agreement, "Cause" shall mean (a) a good faith finding by
the Board, after notice to the Executive and an opportunity to be heard, of
the failure of the Executive to perform her reasonably assigned duties, or
the Executive's gross dishonesty, gross negligence or gross misconduct, or
(b) the conviction of the Executive of, or the entry of a plea of guilty or
nolo contendere by the Executive to, any felony;
4.2 Thirty days after the death or Disability (as hereinafter defined)
of the Executive. For purposes of this Agreement, "Disability" shall mean
the inability of the Executive, due to a physical or mental disability, for
a period of 90 days, whether or not consecutive, during any 360-day period
to perform, with or without reasonable accommodation, the services
contemplated under this Agreement. A determination of Disability shall be
made by a physician satisfactory to both the Executive and the Company;
provided that if the Executive and the Company do not agree on a physician,
the Executive and the Company shall each select a physician and these two
together shall select a third physician, whose determination as to
Disability shall be binding on all parties; or
4.3 At the election of the Executive, upon written notice of
termination, for Good Reason (as hereinafter defined). For purposes of this
Agreement, "Good Reason" shall mean (i) any significant diminution in the
duties of the Executive under this Agreement or (ii) the Company's
requirement that the Executive relocate beyond the greater New York
metropolitan area, or (iii) if there is a change in control of the Parent
so that a single person or entity has control of the Parent (as control is
understood under the Internal Revenue Code or securities laws of the US),
or (iv) upon completion of fulltime employment by the Company through
February 28, 1999. If the Executive chooses to exercise her rights under
this Section 4.3(iv), then Section 4.4 is not applicable.
4.4 At the election of the Executive, upon not less than two (2) weeks'
prior written notice of termination, or, after February 28, 1999, at the
election of the Company, upon written notice of termination.
4.5 Upon the expiration of the Employment Contract.
5. Effect of Termination.
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5.1 Termination for Cause or at Election of the Executive. In the event
the Executive's employment is terminated for Cause pursuant to Section 4.1,
or the Executive's employment is terminated at the election of the
Executive pursuant to Section 4.4, the Company shall, through the last day
of her actual employment by the Company, continue to pay to the Executive
her base salary as in effect on the date of notice of termination and
continue to provide to the Executive the fringe benefits available to her
under Section 3.6 hereof, as of the last day of actual employment.
5.2 Termination for Death or Disability. If the Executive's employment
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is terminated due to death or Disability pursuant to Section 4.2, the
Company shall continue to pay to the estate of the Executive or to the
Executive, as the case may be, for a period of 90 days after termination of
employment due to death or Disability, the Executive's base salary as in
effect on the date of termination.
5.3 Termination by the Executive for Good Reason or at Election of the
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Company. If the Executive's employment is terminated by the Executive for
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Good Reason pursuant to Section 4.3 or at the election of the Company
pursuant to Section 4.4, the Company shall, during the Severance Period (as
hereinafter defined), continue to pay to the Executive her base salary as
in effect on the date of notice of termination and continue to provide to
the Executive the fringe benefits, including accrual of vacation pay,
available to her as of the date of notice of termination under Sections 3.5
and 3.6, except during the Severance Period no options shall vest and no
service credit shall be granted which would have the effect of extending
the Severance Period in accordance with Company's standard severance
policy. Further, a pro rata share of the performance bonus referenced in
Section 3.2 shall be paid to the Executive covering the period from the
beginning of the calendar year up to the date of termination. For the
purposes of this Section 5.3, the performance bonus referenced in Section
3.2 shall be calculated as 50% of the Executive's annual base salary. For
purposes of this Agreement, the "Severance Period" shall mean a period of
nine (9) months after such termination, plus a severance payment of one (1)
week's base salary for each completed six (6) months of Company service as
of the date of notice of termination. If the Executive's employment is
terminated by the Executive for Good Reason pursuant to Section 4.3(iv),
the vesting schedule on all options previously granted to the Executive
will be accelerated so that a total of 100% of the Executive's options
shall vest on the termination date, and the Executive shall have the right
to exercise these options until December 31, 1999. If this paragraph
conflicts with any applicable Stock Option Agreement, this paragraph shall
control.
5.4 Termination at Expiration of Contract. If, prior to April 1, 2000,
the Company has not offered to renew the Employment Contract on terms at
least equal to those contained herein and for a term of not less than one
(1) year, the Company shall continue to pay the Executive her base salary
in effect on the date of termination for a period of nine (9) months after
such termination, plus a severance payment of one (1) week's base salary
for each completed six (6) months of Company service through the expiration
of this Agreement. The Company shall also provide to the Executive during
the Severance Period, the fringe benefits, including accrual of vacation
pay, available to her under Sections 3.5 and 3.6, except as modified by
Section 5.3.
5.5 Survival. The provisions of Sections 5.2, 5.3 and 5.4 shall
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survive the expiration or termination of this Agreement under the
circumstances specified in those Sections for the periods specified in such
Sections. Sections 6 and 7 shall survive the termination of this Agreement.
6. Non-Compete.
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(a) During the Executive's active employment and for the
Severance Period, the Executive will not:
(i) be a partner, stockholder (other than as the holder of
not more than one percent (1%) of the total outstanding stock of),
officer, employee, consultant director, joint venturer, investor or
lender of or to America Online, Inc., CompuServe Corporation,
Microsoft Network, AT&T WorldNet, Netcom On-Line Communications
Services, Inc., EarthLink Network, Inc., MindSpring Enterprises,
Inc., or any corporation or other entity acquiring any of the
foregoing; or involved in providing services that compete directly
with Prodigy; or
(ii) directly or indirectly recruit, solicit or induce, or
attempt to induce, any employee or employees of the Company to
terminate their employment with, or otherwise cease their
relationship with the Company; or
(iii) directly or indirectly solicit, divert or take away,
or attempt to divert or to take away, the business or patronage of
any of the clients, customers or accounts, or prospective clients,
customers or accounts, of the Company, including but not limited to
those clients, customers or accounts which were contacted, solicited
or served by the Executive while employed by the Company.
(b) If any restriction set forth in this Section 6 is found by any court
of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which
it may be enforceable.
(c) The restrictions contained in this Section 6 are necessary for the
protection of the business and goodwill of the Company and are considered
by the Executive to be reasonable for such purposes. The Executive agrees
that any breach of this Section 6 will cause the Company substantial and
irrevocable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Company shall
have the right to seek specific performance and injunctive relief.
(d) Unless the context otherwise requires, all references in this
Section 6 and in Section 7 below to the "Company" shall include all current
or future subsidiaries or affiliates of the Company.
7. Proprietary Information and Developments.
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7.1 Proprietary Information.
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(a) The Executive agrees that all information and know-how
related to the activities of the Company, whether or not in writing,
of a private, secret or confidential nature concerning the Company's
business or financial affairs collectively, ("Proprietary
Information") is and shall be the exclusive property of the Company.
By way of illustration, but not limitation, Proprietary Information
may include inventions, products, processes, methods, techniques,
formulas, compositions, compounds, projects, developments, plans,
research data, clinical data, financial data, personnel data,
computer programs, and customer and supplier lists. The Executive
will not disclose any Proprietary Information to others outside the
Company or use the same for any unauthorized purposes without
written approval by an officer of the Company, either during or
after her employment, unless and until such Proprietary information
has become public knowledge without fault by the Executive.
(b) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks,
program listings, or other written, photographic, or other tangible
material containing Proprietary Information, whether created by the
Executive or others, which shall come into her custody or possession,
shall be and are the exclusive property of the Company to be used by
the Executive only in the performance of her duties for the Company.
(c) The Executive agrees that her obligation not to disclose or
use information, know-how and records of the types set forth in
paragraphs (a) and (b) above, also
extends to such types of information, know-how, records and tangible
property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to
the Company or to the Executive in the course of the Company's
business.
7.2 Developments.
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(a) The Executive will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods,
developments, software, and works of authorship, related to the
activities of the Company, whether patentable or not, which are
created, made, conceived or reduced to practice by the Executive or
under her direction or jointly with others during her employment by
the company, whether or not during normal working hours or on the
premises of the Company (all of which are collectively referred to
in this Agreement as "Developments").
(b) The Executive agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all her
right, title and interest in and to all Developments and all related
patents, patent applications, copyrights and copyright applications.
The Executive also acknowledges that all work fixed in a tangible
medium of expression shall be deemed a work made for hire under the
US Copyright Act such that the work is owned by the Company at the
moment of creation.
(c) The Executive agrees to cooperate fully with the Company, both
during and after her employment with the Company, with respect to
the procurement, maintenance and enforcement of copyrights and
patents (both in the United States and foreign countries) relating
to Developments. The Executive shall sign all papers, including,
without limitation, copyright applications, patent applications,
declarations, oaths, formal assignments, assignment of priority
rights, and powers of attorney, which the Company may deem necessary
or desirable in order to protect its rights and interests in any
Development.
7.3 Other Agreements. The Executive hereby represents that her
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performance of all the terms of this Agreement and as an employee of the
Company does not and will not breach the terms of any agreement with any
previous employer or other party to refrain from using or disclosing any
trade secret, confidential or proprietary information, knowledge or data
acquired by her in confidence or in trust prior to her employment with the
Company or to refrain from competing, directly or indirectly, with the
business of such previous employer or any other party.
8. Notices.
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All notices required or permitted under this Agreement shall be in writing
and shall be deemed effective upon personal delivery or upon sending, by
registered or certified mail, postage prepaid, addressed to the other party at
the address shown above, or at such other address or addresses as either party
shall designate to the other in accordance with this Section 8. In order to
exercise her rights under section 4.3(iv), Executive must give notice to the
Company between January 15 and January 31, 1999.
9. Pronouns.
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Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
forms of nouns and pronouns shall include the plural, and vice versa.
10. Entire Agreement.
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This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter of this Agreement, except that the Agreement
Regarding Confidential Information, the Prodigy Business Conduct Guidelines, and
other documents executed on the commencement of employment, shall remain in full
force and effect.
11. Amendment.
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This Agreement may be amended or modified only by a written instrument
executed by both the Company and the Executive.
12. Governing Law.
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This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the State of New York in the United States, without reference
to conflict of law principles.
13. Successors and Assigns.
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This Agreement shall be binding upon and inure to the benefit of both
parties and their respective successors and assigns, including any corporation
with which or into which the Company may be merged or which may succeed to its
assets or business; provided, however, that the obligations of the Executive are
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personal and shall not be assigned by her.
14. Miscellaneous.
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14.1 No delay or omission by either the Company or the Executive in
exercising any right under this Agreement shall operate as a waiver of that
or any other right. A waiver or consent given by either the Company or the
Executive on any one occasion shall be effective only in that instance and
shall not be construed as a bar or waiver of any right on any other
occasion.
14.2 The captions of the sections of this Agreement are for convenience
of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
14.3 In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.
PRODIGY SERVICES CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Title: Chairman and CEO
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EXECUTIVE
/s/ Xxxxxx X. Pooth
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