EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT effective as of April 4, 2005 (the “Commencement Date”) by and between
Xxxxx Communications, Inc. (the “Company”) and Xxxxxxxxxxx Xxxxxx (the
“Executive”) (this “Agreement”).
The
parties hereto wish to enter into an employment agreement on the terms and
conditions set forth below. Accordingly, in consideration of the premises
and
the respective covenants and agreements of the parties herein contained,
and
intending to be legally bound hereby, the parties hereto agree as
follows:
1. Term.
The
Executive's employment under this Agreement shall commence on the Commencement
Date and shall end, unless terminated earlier pursuant to Section 4, at the
close of business on April 3, 2007 (the “Term”); provided,
however,
that
the Term shall thereafter be automatically extended for each succeeding one
(1)
year period (the Company shall also have the option to extend the Term for
an
additional one (1) year, thereby increasing the extension period to two (2)
years) unless either party hereto shall provide the other party with a written
notice at least ninety (90) days prior to the end of the then current Term,
advising that the party providing the notice shall not agree to so extend
the
Term.
2. Title,
Duties and Authority.
The
Executive shall serve as Chief Operating Officer of the Company, and shall
have
such responsibilities and duties (consistent with the Executive's position
as
Chief Operating Officer of the Company) as may from time to time be assigned
to
the Executive by the board of directors of the Company (the “Board”), and shall
have all of the powers and duties usually incident to such offices. The
Executive shall devote substantially all of his working time and efforts
to the
business and affairs of the Company, except for vacations, illness and
incapacity; provided,
however,
that
the Executive may serve on the boards of directors of non-public companies
and
charitable organizations and may devote reasonable time to charitable and
civic
organizations, in all cases provided that the performance of his duties and
responsibilities on such boards and in such service does not interfere
substantially with the performance of his duties and responsibilities under
this
Agreement. The Company hereby agrees to consider the Executive as a possible
replacement should the Company’s Chief Executive Officer need to be replaced
during the Term.
3. Compensation
and Benefits.
(a) Base
Salary.
During
the Term, the Company shall pay the Executive a base salary (“Base Salary) at
the rate of Two Hundred Twenty-Five Thousand Dollars ($225,000) per annum,
payable in accordance with the Company’s regular payroll practices; provided,
however,
that
following the Commencement Date, should the Company successfully complete
a
financing with an investment bank for an amount in excess of Ten Million
Dollars
($10,000,000), the rate of Base Salary shall thereupon be prospectively
increased to Two Hundred Seventy-Five Thousand Dollars ($275,000) per annum
and,
thereafter, the Compensation Committee of the Board shall on an annual basis
consider increasing the Executive’s rate of Base Salary.
(b) Annual
Bonus.
For
each calendar year (or part thereof) during the Term, the Executive shall
be
eligible to receive from the Company a cash bonus of up to Twenty-Five Thousand
Dollars ($25,000) upon the Company’s satisfaction of goals predetermined by the
Board for each such year (with proration for any partial calendar years
occurring during the Term). Such annual bonus shall be payable by January
31 of
the next following calendar year. On an annual basis the Compensation Committee
of the Board shall consider increasing the Executive’s eligible Bonus
amount.
(c) Equity
Compensation.
The
Executive shall receive the following awards under the Xxxxx Communications,
Inc. Omnibus Securities and Incentive Plan (the “Plan”), such awards to be
subject to all of the applicable terms and conditions of the Plan:
(i) The
Executive shall receive a stock option for the purchase of that number of
shares
of the Company’s common stock equal to eighty-five percent (85%) of the number
of shares subject to the stock option granted contemporaneously under the
Plan
to the Company’s Chief Executive Officer (the “CEO’s Option”). The terms of the
Executive’s option, including but not limited to the exercise price and vesting
requirements, if any, shall be substantially the same as the terms of the
CEO’s
Option.
(ii) The
Executive shall receive a restricted stock award for Seven Hundred Fifty
Thousand (750,000) shares, with a two (2) year service-based cliff vesting
requirement for the lapse of the attendant transfer restrictions on the
shares.
(d) Employee
Health and Dental Benefits.
The
Executive shall be entitled to participate in the Company’s employee health and
dental benefits plan during the Term, as such plan may be in effect from
time to
time.
(e) Expenses.
The
Executive shall be entitled to receive prompt reimbursement of his expenses
incurred in the performance of his employment hereunder upon his submission
to
the Company of reasonable and customary expense claims to the Company, in
accordance with the Company’s procedures for expense reimbursement.
(f) Vacations.
The
Executive shall be entitled to four (4) weeks paid vacation during the Term
with
no right to carry over unused days.
(g) Sick
Pay.
The
Executive shall be entitled to five (5) paid sick days during the Term, with
no
right to carry over unused days.
4. Termination.
The
Executive's employment hereunder with the Company may be terminated under
the
following circumstances:
(a) Death
or Disability.
If the
Executive shall die or become disabled during the Term, the Company may
terminate the Executive's employment hereunder for death or “Disability,” as
applicable. For purposes of this Agreement, the Executive’s “Disability” shall
be determined in the sole discretion of the Board.
(b) Cause.
The
Company by action of the Board may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
“Cause” to terminate the Executive's employment hereunder upon the determination
by the Board of:
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(i) the
failure by the Executive to substantially perform the Executive's duties
hereunder (other than any such failure resulting from the Executive's Disability
which shall be subject to the provisions of Section 4(a));
(ii) the
willful violation by the Executive of any of the Executive's material
obligations hereunder;
(iii) the
willful engaging by the Executive in misconduct which is materially injurious
to
the business or reputation of the Company or any of its affiliates;
or
(iv) the
Executive's conviction of a felony.
Notwithstanding
the foregoing, the Executive shall not be terminated for Cause
without:
(A) delivery
of a written notice to the Executive setting forth the reasons for the Company's
intention to terminate the Executive's employment hereunder for
Cause;
(B) the
failure of the Executive to cure the nonperformance, violation or misconduct
described in the notice referred to in clause (A) of this paragraph, if cure
thereof is possible, to the reasonable satisfaction of the Board, within
fifteen
(15) days of the Executive's receipt of such notice; and
(C) an
opportunity for the Executive, together with the Executive's counsel, to
be
heard before the Board.
(c) Without
Cause.
The
Company by action of the Board may terminate the Executive's employment
hereunder without Cause.
(d) Resignation.
The
Executive may terminate the Executive's employment hereunder by his
resignation.
5.
Compensation
upon Termination.
(a) Death
or Disability.
If the
Executive's employment with the Company hereunder is terminated on account
of
the Executive's death or Disability pursuant to Section 4(a), the Company
shall
as soon as practicable pay to the Executive or the Executive's estate, as
applicable, or as may be directed by the legal representatives of the Executive
or the Executive's estate, as applicable, any Base Salary accrued and due
to the
Executive under Section 3(a) through the date of the Executive's death or
termination for Disability, as applicable. Other than the foregoing, the
Company
shall have no further obligations to the Executive hereunder.
(b) By
the
Company for Cause or By the Executive.
If the
Executive's employment with the Company hereunder is terminated by the Company
for Cause pursuant to Section 4(b) or by the Executive pursuant to Section
4(d),
the Company shall as soon as practicable pay the Executive any Base Salary
accrued and due to the Executive under Section 3(a) through the Executive's
date of termination. Other than the foregoing, the Company shall have no
further
obligations to the Executive hereunder.
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(c) Termination
By the Company Without Cause.
If the
Company shall terminate the Executive's employment hereunder without Cause
pursuant to Section 4(c), then the Company shall:
(i) as
soon
as practicable pay the Executive any Base Salary accrued and due to the
Executive under Section 3(a) through his date of termination;
(ii)
continue
to pay the Executive his Base Salary in effect as of his date of termination
for
the lesser of the then remainder of the Term or nine (9) months (or until
such
earlier time that the Executive violates the provisions of Section 6, at
the
times such payments would otherwise have been made under Section 3(a);
and
(iii)
provide
the Executive for the lesser of the then remainder of the Term or nine (9)
months (or until such earlier time that the Executive violates the provisions
of
Section 6, with continued participation in the Company’s employee health and
dental benefit plan, to the extent that such a plan shall then continue to
be in
effect.
Other
than the foregoing, the Company shall have no further obligations to the
Executive hereunder.
6.
Restrictive
Covenants.
(a) Reasonable
Covenants.
It is
expressly understood by and between the Company and the Executive that the
covenants contained in this Section 6 are an essential element of this Agreement
and that but for the agreement by the Executive to comply with such covenants
and thereby not to diminish the value of the organization and goodwill of
the
Company or any affiliate or subsidiary of the Company, including relations
with
their employees, clients, customers and accounts, the Company would not enter
into this Agreement. The Executive has independently consulted with his legal
counsel and after such consultation agrees that such covenants are reasonable
and proper.
(b) Noncompetition;
No Diversion of Customers; No Solicitation of Employees, Etc.
During
the Term and for nine (9) months after the end of the Term the Executive
shall
not:
(i)
engage,
anywhere within the geographical areas in which the Company, and/or any of
its
affiliates or subsidiaries have conducted their business operations or provided
services as of the date hereof or at any time prior to the end of the term
of
this Agreement, directly or indirectly, alone, in association with or as
a
shareholder, principal, agent, partner, officer, director, employee or
consultant of any other organization, in any business conducted by the Company
or any of its affiliates or subsidiaries;
(ii)
divert
to
any competitor of the Company or any of its affiliates or subsidiaries, any
customer of the Company or any of its affiliates or subsidiaries;
(iii)
solicit
or encourage any officer, employee or consultant of the Company or any of
its
affiliates or subsidiaries to leave the employ of the Company or any of its
affiliates or subsidiaries for employment by or with any competitor of the
Company or any of its affiliates or subsidiaries;
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provided,
however,
that
the Executive may invest in stocks, bonds or other securities of any competitor
of the Company or any of its affiliates or subsidiaries if:
(A) such
stocks, bonds, or other securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934;
(B) his
investment does not exceed, in the case of any class of the capital stock
of any
one issuer, one percent (1%) of the issued and outstanding shares, or, in
the
case of other securities, one percent (1%) of the aggregate principal amount
thereof issued and outstanding; and
(C) such
investment would not prevent, directly or indirectly, the transaction of
business by the Company and/or of its affiliates or subsidiaries with any
state,
district, territory or possession of the United States or any governmental
subdivision, agency or instrumentality thereof by virtue of any statute,
law,
regulation or administrative practice.
If,
at
any time, the provisions of this Section 6(b) shall be determined to be invalid
or unenforceable by reason of being vague or unreasonable as to area, duration
or scope of activity, this Section 6(b) shall be considered severable and
shall
become and shall be immediately amended solely with respect to such area,
duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter
and
the Executive hereby agrees that this Section 6(b) as so amended shall be
valid
and binding as though any invalid or unenforceable provision had not been
included herein. Except as provided in this Section 6(b), nothing in this
Agreement shall prevent or restrict the Executive from engaging in any business
or industry in any capacity.
(c) Nondisclosure
of Confidential Information.
The
Executive shall keep secret and confidential and shall not disclose to any
third
party in any fashion or for any purpose whatsoever, any information regarding
this Agreement, or any other information regarding the Company or its affiliates
or subsidiaries which is not available to the general public, and/or not
generally known outside the Company or any such affiliate or subsidiary,
to
which he has or shall have had access at any time during the course of his
employment with the Company, including, without limitation, any information
relating to the Company's (and its affiliates' or subsidiaries'):
(i)
business,
operations, plans, strategies, prospects or objectives;
(i) products,
technologies, processes, specifications, research and development operations
and
plans;
(ii) customers
and customer lists;
(iii) distribution,
sales, service, support and marketing practices and operations;
(iv) financial
condition and results of operations;
(v) operational
strengths and weaknesses; and
(vi) personnel
and compensation policies and procedures.
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Notwithstanding
the foregoing provisions of this Section 6, the Executive may discuss this
Agreement with the members of his immediate family and with his personal
legal
and tax advisors and may disclose the existence of his employment with the
Company to any third party.
(d) Specific
Performance.
Without
intending to limit the remedies available to the Company or its affiliates
or
subsidiaries, the Executive hereby agrees that damages at law would be an
insufficient remedy to the Company or its affiliates or subsidiaries in the
event that the Executive violates any of the provisions of this Section 6,
and
that, in addition to money damages, the Company or its affiliates or
subsidiaries may apply for and, upon the requisite showing, have injunctive
relief in any court of competent jurisdiction to restrain the breach or
threatened breach of or otherwise to specifically enforce the covenants
contained in this Section 6.
7. Successors.
This
Agreement cannot be assigned by any of the parties hereto without the prior
written consent of the other party hereto, except that it shall be binding
automatically on any successors and assigns of all or substantially all of
the
business and/or assets of the Company (whether direct or indirect, by purchase,
merger, consolidation or otherwise).
8. Arbitration.
Except
as provided in Section 6(c), all controversies, claims or disputes arising
out
of or relating to this Agreement shall be settled by binding arbitration
under
the rules of the American Arbitration Association, as the sole and exclusive
remedy of either party, and judgment upon such award rendered by the
arbitrators(s) may be entered in any court of competent jurisdiction. The
costs
of arbitration shall be borne by the unsuccessful party or otherwise as
determined by the arbitrators in their discretion.
9. Governing
Law.
The
validity, interpretation, construction and performance of this Agreement
shall
be governed by the laws of the State of Delaware without regard to conflicts
of
law principles.
10. Amendments.
No
provision of this Agreement may be modified, waived or discharged unless
such
waiver, modification or discharge is agreed to in writing signed by the
Executive and such officers of the Company as may be specifically designated
for
such purpose by the Board.
11. Entire
Agreement.
This
Agreement sets forth the entire agreement of the parties hereto in respect
of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto.
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12. Survival.
The
obligations of the parties hereto contained in Sections 5, 6 and 8 shall
survive
the termination of this Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
and
year first above written.
XXXXX
COMMUNICATIONS, INC.
By:____________________________
Name:
Title:
______________________________
XXXXXXXXXXX
XXXXXX
