EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 9, 2000, is
entered into by and between Metromedia Fiber Network, Inc. ("MFN") and
SiteSmith, Inc., a Delaware corporation (formerly known as SiteBrigade, Inc.)
("Company"), on the one hand, and Xxxxxx Xxxx ("Executive"), on the other hand.
WHEREAS, MFN and Company that Executive be employed as the Senior Vice
President of Operations of Company, and Executive desires to be so employed by
Company, on the terms and conditions herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Employment.
(a) Title; Reporting. During the Term (as hereinafter defined), Company
shall employ Executive, and Executive shall render services to Company as
the Senior Vice President of Operations of Company and shall report to the
Chief Executive Officer of the Company.
(b) Duties. Executive shall have such duties as are consistent with the
position of Senior Vice President of Operations.
(c) No Other Employment. Executive shall devote his full and exclusive
business time and best efforts to the performance of his duties under this
Employment Agreement and shall perform them faithfully, diligently and
competently.
(d) No Conflict. Executive represents and warrants that neither the
execution by him of this Agreement nor the performance by him of his duties
and obligations hereunder will conflict with or violate any agreement to
which he is a party or by which he is bound.
(e) Commencement Date. This Agreement amends and supercedes the earlier
Change of Control Agreement between Executive and Company of October 1,
1999, PROVIDED, HOWEVER, that this Agreement shall become effective as of
the effective date of the merger between Aqueduct Acquisition Corp., a
wholly-owned subsidiary of MFN ("Merger Sub"), and the Company (the
"Commencement Date"). The earlier Change of Control Agreement will continue
in effect until the effective date of the merger.
(f) Place of Employment. Executive's office will be in Santa Clara,
California; PROVIDED, HOWEVER, that Executive shall travel for business
purposes or perform services at the Company's other locations as required
from time to time.
2. Term of Employment. Executive agrees to work for, and remain employed
by, the Company for a period of two years, that is, until September 30, 2002.
Until this date, Executive may only resign his employment for Good Cause, as
defined herein. The Company may terminate Executive's employment at any time for
any reason, with or without cause. If Executive's employment continues after two
years, then Executive's employment with the Company shall at all times
thereafter be "at will," which means that either the Executive or the Company
may terminate the Executive's employment at any time for any or no reason, with
or Without Cause (as defined below) by giving notice in writing. Executive's
employment shall terminate automatically in the event of his death. The term of
Executive's employment under this Agreement shall commence on the date hereof
and continue until terminated as provided for herewith ("Term").
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3. Compensation.
(a) Base Salary. Company shall pay to Executive throughout the Term an
annual salary (the "Base Salary") of not less than $225,000 per year,
payable in accordance with the Company's customary policies. The Base Salary
will be reviewed at least annually by the Company's Chief Executive Officer
and Board of Directors and, if appropriate, it will be increased.
(b) Target Bonus. For each one year period starting on January 1, 2001,
Executive shall be eligible to earn an annual discretionary incentive bonus
equal to at least 40% of his Base Salary ("Target Bonus"). The Target Bonus
shall be earned based on achievement of objectives to be identified by the
Company's Chief Executive Officer ("CEO"). The CEO will set objectives
mutually agreed upon by Executive and the CEO by February 28 of the year in
question. Target Bonuses payable under this Subsection 3(b) shall be payable
in accordance with the Company's normal practices and policies no later than
January 31 of the following year.
4. Equity.
(a) Option Grant. MFN will grant Executive an option to purchase
200,000 shares of MFN class A common stock, par value $.01 per share (the
"Option Shares"), subject to the terms of the Metromedia Fiber
Network, Inc. 2000 Stock Option Plan and execution of the standard form of
stock option agreement thereunder (except as necessarily modified to conform
to the provisions of this Agreement). This Option grant shall be granted
concurrently with or as soon as reasonably practicable after the
Commencement Date. The per share exercise price of the Option Shares shall
be equal to the per share fair market value of the class A common stock on
the date of grant. The Option Shares shall become exercisable as to 25% of
the Option Shares upon the one year anniversary of the Commencement Date and
as to the remaining shares shall vest ratably over each of the next three
annual anniversaries thereof, such that all of the Option Shares shall be
vested as of the fourth anniversary of the Commencement Date.
(b) Company Stock. On September 15, 1999 Executive purchased 7,200,000
shares of Company Common Stock at $0.001 a share pursuant to the terms of a
Common Stock Purchase Agreement ("Purchase Agreement"). A total of 1,350,000
shares subject to the Purchase Agreement were vested as of the date of
grant. The remaining shares vested, that is, the Company's repurchase right
lapsed each month over the course of forty-eight months. On October 1, 1999,
Executive executed a Change of Control Agreement that provided for, INTER
ALIA, certain accelerated vesting. Executive will execute the Waiver of
Accelerated Vesting contained in Exhibit A, attached hereto.
(c) Registration of Shares. The Company will take all reasonable steps
at its cost to register the Executive's Option Shares, as well as all shares
purchased by Executive under Stock Purchase Agreement, so that the Executive
can sell any vested shares if he so chooses following the expiration of any
applicable lock-up period. Other than as set forth in this Subsection 4(c),
the Company shall be under no obligation to register any of the shares and
the Company shall not be obligated to register the shares hereunder if so
doing would cause the Company to violate any applicable laws.
5. Benefits.
(a) General Fringe Benefits. Executive shall be entitled to participate
in the life, hospitalization, health, accident and disability insurance
plans, health programs, pension plans and other benefit and compensation
plans generally available to senior executives of Company from time to time.
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(b) Reimbursements. Company shall pay or reimburse Executive for all
reasonable expenses actually incurred or paid by Executive during the Term
in the performance of Executive's duties to Company upon presentation by
Executive of expense statements or vouchers.
6. "Change-in-Control." In the event of a "change-in-control" at any time
after the Commencement Date, then 50% of the unvested Option Shares, as well as
all shares subject to the Stock Purchase Agreement, immediately shall become
fully vested and exercisable and, where applicable, the Company's repurchase
right will lapse as to such shares, as of the date of the "change-in-control."
For all purposes under this Agreement, "change-in-control" shall mean a sale of
all or substantially all of MFN's or the Company's assets, or any merger or
consolidation of MFN or the Company with or into another corporation other than
a merger or consolidation in which the holders of more than 50% of the shares of
capital stock of MFN or the Company outstanding immediately prior to such
transaction continue to hold directly or indirectly (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of MFN or the Company, or such surviving
entity, outstanding immediately after such transaction.
7. Termination or Resignation of Employment.
(a) Executive's employment may be terminated at the option of Company by
notice to Executive (i) for Cause (as hereinafter defined), or (ii) Without
Cause. Executive may resign his employment for Good Reason at any time prior
to September 30, 2002 and for any reason at any time thereafter.
(b) If Company shall terminate Executive's employment hereunder for
Cause, Executive shall have no right to receive any compensation or benefit
from Company hereunder on and after the effective date of such notice,
except for compensation, benefits, and reimbursements that are accrued and
unpaid as of the date of termination.
(c) If Company terminates Executive's employment hereunder Without
Cause, or Executive resigns his employment for Good Reason, at any time
other than on or within one year after a "change-in-control," Executive
shall be paid the following for a period equal to the greater of (i) the
period from the date of termination of employment through September 30,
2002, or (ii) six months after the date of termination of employment
(hereafter referred to as the "Severance Period"): (A) his then-current
annual Base Salary (subject to applicable tax withholding), payable in
accordance with the Company's normal payroll practices through the Severance
Period; (B) his Target Bonus at the rate in effect for the period in which
the termination occurs (as though all milestones or objectives applicable to
such bonus have been achieved), less all applicable tax withholding, for the
Severance Period (Executive will be entitled to the full Target Bonus for
each full annual bonus period falling within the Severance Period, as well
as a pro rata portion of the Target Bonus for any additional portion of the
Severance Period); (C) reimbursement for his expenses incurred in continuing
his medical coverage for himself and his dependents under the Consolidated
Omnibus Budget Reconciliation act of 1985, as amended ("COBRA") for the
Severance Period, provided Executive makes a timely election for such
continued coverage; and (D) Executive's Option shares shall be deemed to
have vested and become exercisable as if Executive had continued employment
with the Company through the Severance Period. In addition, the Executive's
shares of Company Common Stock purchased under the Stock Purchase Agreement
shall immediately and fully vest, and the Company's right to repurchase as
to such shares if applicable shall lapse as to all such shares.
(d) If Company, or a successor to the Company's business as a result of
a "change-in-control" (as defined in Section 6 above), terminates
Executive's employment hereunder Without Cause or Executive resigns for Good
Reason on or within twelve months after a "change-in-control," Executive
shall be entitled to receive a lump sum payment equal to his then current
annual Base
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Salary plus his Target Bonus for the Severance Period (as though all
milestones or objectives applicable to such bonus have been achieved), less
all applicable tax withholding (the amount of the Target Bonus will be
calculated as in Subsection 7(c) above); reimbursement for his expenses
incurred in continuing his medical coverage for himself and his dependents
under the Consolidated Omnibus Budget Reconciliation act of 1985, as amended
("COBRA") for Severance Period, provided Executive makes a timely election
for such continued coverage; and Executive's Option shares shall immediately
and fully vest and become exercisable.
(e) As used in this Employment Agreement, a termination for "Cause"
shall mean a good faith determination by the Company that Executive's
employment be terminated for any of the following reasons: (i) Executive's
willful failure to perform his duties to the Company, to follow Company
policy as set forth from time to time, or to follow the legal directives of
his supervisor, in each case in a manner that results in material damage to
the Company; (ii) conviction, including by guilty plea or plea of no
contest, of Executive of a felony or of another crime involving fraud, moral
turpitude or material loss to the Company; (iii) willful material breach by
Executive of his affirmative or negative covenants or undertakings
hereunder, which such breach is not remedied within five (5) business days
after written notice to Executive thereof (which notice shall be signed by
the Company CEO or other designated officer of Company and refer to a
specific breach of this Employment Agreement); (iv) the Executive's willful
use or unauthorized disclosure of any proprietary information or trade
secrets of the Company or any other party to whom the Executive owes an
obligation of nondisclosure as a result of his relationship with the
Company; or (v) Executive's willful act of fraud, embezzlement, dishonesty
or other misconduct that materially damages the Company. A termination of
Executive's employment in any other circumstances or for any other reasons
will be a termination "Without Cause."
(f) Resignation by Executive for "Good Reason." A resignation of
Executive's employment by written notice within six months of any of the
following events shall be a Resignation for Good Reason:
(i) a material reduction in the nature or scope of Executive's title,
authority, powers, stature, duties, or responsibilities hereunder;
(ii) a reduction of greater than 5% in Executive's Base Salary, Target
Bonus, benefits and/or incentive payments;
(iii) a material change in Executive's reporting relationship;
(iv) a requirement that Executive relocate his principal place of employment
by more than fifty (50) miles from Santa Clara, California, provided
such relocation is effected by the Company without his written consent;
or
(v) Company's materially breaching its affirmative or negative covenants or
undertakings hereunder and such breach shall not be remedied within
fifteen (15) days after notice to Company thereof (which notice shall be
signed by Executive and refer to a specific breach of this Employment
Agreement).
A resignation of employment by Executive for any other reason shall be a
resignation without "Good Reason."
8. Limitation on Change of Control Benefits. In the event that the
acceleration of vesting benefits provided pursuant to this Agreement in
connection with, or as a result of, a Change of Control of the Company
(a) constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (b) but for this
Section, would be subject to the excise tax imposed by Section 4999 of the Code,
then such benefits shall be payable either: (i) in full, or (ii) as to such
lesser amount which would result in no portion of such benefits
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being subject to excise tax under Section 4999 of the Code, whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the
Executive's receipt on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Executive and the Company otherwise agree
in writing, any determination required under this Section 8 shall be made in
writing by the Company's independent public accountants (or if the Company does
not have independent public accountants as such, any other accounting firm
engaged by the Company to prepare its financial statements) (the "Accountants"),
whose determination shall be conclusive and binding upon Executive and the
Company for all purposes. For purposes of making the calculations required by
this Section 8, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may relay on reasonable, good
faith interpretations concerning the application of Section 280G and 4999 of the
Code. The Company and the Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section 8. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 8.
9. Prohibited Activities.
(a) Non-Compete Period. For the purposes of this Employment Agreement,
the term "Non-Compete Period" shall mean the Term, and if Executive's
employment is terminated by Company for "Cause" or Executive resigns his
employment without "Good Reason," an additional period of six months from
and after the date of termination.
(b) Non-competition. During the Non-Compete Period, Executive shall not
directly or indirectly compete with, be engaged in the business of, be
employed by, act as a consultant to, or be a director, officer, employee,
owner or partner of, any person or entity which is engaged in the primary
business of MFN or the Company at such time and in the territories served by
MFN or the Company in such business during the Non-Compete Period. However,
nothing in this Agreement will prevent Executive from accepting speaking or
presentation engagements in exchange for honoraria or from serving on boards
of charitable organizations, or from owning no more than two percent (2%) of
the outstanding equity securities of a corporation whose stock is listed on
a national stock exchange or the Nasdaq.
(c) Consideration for Non-Competition Agreement. Executive specifically
acknowledges and agrees that the covenant contained in Subsection 9(b)
hereof is an essential element of the Merger Agreement, dated as of the date
hereof, (the "Merger Agreement"), by and among MFN, Merger Sub and Company
and this Agreement and that, but for the agreement of Executive to comply
with such covenant, MFN would not have entered into the Merger Agreement and
Company would not have entered into this Agreement.
(d) Solicitation of Employees. During the Non-Compete Period, Executive
shall not directly or indirectly employ, or solicit to leave Company's
employ, or solicit to join the employ of another person or entity (including
any such person or entity owned or controlled, directly or indirectly, by
Executive) any employee of Company or any person who has been such an
employee during the twelve months preceding Executive's date of termination.
(e) Confidential Information. During and at all times subsequent to the
Term, Executive shall keep secret and shall not exploit or disclose or make
accessible to any person or entity, except in furtherance of the business of
Company, and except as may be required by law or legal process, any
confidential business information of any type that was acquired or developed
by either Company or any of its subsidiaries or affiliates, or Executive,
prior to or during the Term. In addition, the term "confidential business
information" shall not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by Executive;
or
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(ii) was available to Executive prior to any employment by Company as a
result of his general business experience.
(f) Divisibility. The provisions contained in this Section 9 as to the
time period and scope of activities restricted shall be deemed divisible, so
that if any provision contained in this section 9 is determined to be
invalid or unenforceable, that provision shall be deemed modified so as to
be valid and enforceable to the full extent lawfully permitted.
(g) Relief. Executive acknowledges that the provisions of this
Section 9 are reasonable and necessary for the protection of Company and
that Company will be irreparably damaged if such covenants are not
specifically enforced. Accordingly, it is agreed that Company will be
entitled to injunctive relief for the purpose of restraining Executive from
violating such covenants (and no bond or other security shall be required in
connection therewith), in addition to any other relief to which Company may
be entitled.
10. Indemnification. Executive has entered into an Indemnification
Agreement with Company, which will continue in full force and effect. Further,
MFN agrees to indemnify Executive to the same extent to which the Company is
obligated to indemnify Executive under the Indemnification Agreement.
11. Miscellaneous.
(a) Survival. The covenants and agreements set forth in this Employment
Agreement shall survive Executive's termination of employment, irrespective
of any investigation made by or on behalf of any party.
(b) Headings. The section headings of this Employment Agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this Employment Agreement.
(c) Assignment. This Employment Agreement shall not be assignable by
Executive without the prior written consent of Company, and shall inure to
the benefit of and be binding upon Executive and his legal representatives.
(d) Territory. Executive shall not be required to relocate or render
services hereunder in any geographic area beyond a radius of fifty
(50) miles from Santa Clara, California; PROVIDED, HOWEVER, that Executive
may be required to travel for business purposes from time to time as
reasonably requested by Company.
(e) Governing Law. This Employment Agreement shall be governed by and
construed in accordance with the law of the State of California applicable
to agreements made and to be performed in that State, without reference to
its principles of conflicts of law.
(f) Notices. All notices, requests, demands and other communications
(collectively, "Notices") that are required or may be given under this
Employment Agreement, shall be in writing, signed by the party or the
attorney for that party. All Notices shall, except as otherwise specifically
provided herein to the contrary, be deemed to have been duly given or made:
if by hand, immediately upon delivery; if by telecopier or similar device,
immediately upon sending, provided notice is sent on a business day during
the hours of 9:00 a.m. and 6:00 p.m. E.S.T., but if not, then immediately
upon the beginning of the first business day after being sent; if by Federal
Express, Express Mail or any other overnight delivery service, one day after
being placed in the exclusive custody and control of said courier; and if
mailed by certified mail, return receipt requested, five (5) business days
after mailing. All notices are to be given or made to the parties at
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the following addresses (or to such other address as either party may
designate by notice in accordance with the provisions of this section:
c/o Metromedia Fiber Network, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Chief Operating Officer
Telephone: (000) 000-0000
If to Company at: Facsimile: (000) 000-0000
c/o Metromedia Fiber Network, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
With a copy to: Facsimile: (000) 000-0000
If to Executive at: his most recent home address in the Company's records
(g) Enforceability. If any provision of this Employment Agreement is
invalid or unenforceable, the balance of this Employment Agreement shall
remain in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons
and circumstances.
(h) Waiver. The failure of a party to this Employment Agreement to
insist on any occasion upon strict adherence to any term of this Employment
Agreement shall not be considered to be a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any
other term of this Employment Agreement. Any waiver or other modification
must be in writing.
(i) Complete Agreement. This Employment Agreement supersedes any prior
or contemporaneous agreements between the parties with respect to its
subject matter as provided herein, is intended as a complete and exclusive
statement of the terms of the agreement between the parties with respect to
its subject matter, and cannot be changed or terminated orally.
(j) Attorneys' Fees. The Company will pay Executive's reasonable
attorneys' fees in connection with negotiating and drafting this Employment
Agreement and the other documents referred to herein.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the date first above written.
SITESMITH, INC.
By: /s/ XXXXXX XXXX
-------------------------------
Name: Xxxxxx Xxxx
Title: Director
METROMEDIA FIBER NETWORK, INC.
By: /s/ XXXXXX XXXXXX
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Vice President
EXECUTIVE:
By: /s/ XXXXXX XXXX
--------------------------------
XXXXXX XXXX
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