Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of October
31, 2002, by and between IFX CORPORATION, a Delaware corporation ("IFX" and,
collectively with its subsidiaries, "Employer"), and XXXX XXXXXXXXXX
("Employee").
W I T N E S S E T H:
WHEREAS, Employer is in the business of acquiring, developing and
maintaining Internet access and related services in Latin America and other
non-U.S. jurisdictions (the "Business");
WHEREAS, Employer desires to continue to employ Employee to oversee all
management and day-to-day operations as President of Employer, and Employee
desires to continue such employment, on the terms and subject to the conditions
set forth herein;
WHEREAS, Employee's existing Employment Agreement (the "Prior Agreement")
is dated as of May 7, 2001, and both Employee and Employer believe it would be
in the best interests of both Employee and Employer to amend and restate the
Prior Agreement by entering into this Agreement;
WHEREAS, Employee has had an opportunity to review the terms and conditions
of this Agreement, to negotiate the terms hereof and to engage legal counsel on
his behalf if he so desires.
NOW THEREFORE, in consideration of Employer's continued employment of
Employee, the terms, conditions and covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Employee and Employer, intending to be legally bound, hereby agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Terms Defined Herein. Except as otherwise herein expressly provided,
the following terms and phrases shall have the meanings set forth below:
"Affiliate" means (a) in the case of an entity, any Person who or which,
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, any specified Person or (b) in
the case of an individual, such individual's spouse, children, grandchildren or
parents or a trust primarily for the benefit of any of the foregoing.
"Cause" means (a) the willful and continued failure by Employee to
substantially perform his duties under this Agreement (other than any failure
resulting from Employee's death or incapacity due to physical or mental illness)
for five days after written demand for substantial performance is delivered by
Employer which specifically identifies the manner in which Employer believes
Employee has not substantially performed his duties and which notice is
specifically identified as being issued pursuant to this paragraph, (b) the
commission by
Employee of theft, embezzlement, fraud or misappropriation of funds against
Employer or the willful engaging by Employee in other misconduct which is
materially injurious to Employer, (c) the willful violation by Employee of
Section 3.1, 3.2, 3.3 or 3.4 of this Agreement or (d) the conviction of Employee
of a felony involving fraud, dishonesty or moral turpitude. Notwithstanding
anything to the contrary contained herein, none of the following events shall be
treated as "cause":
(i) bad judgment,
(ii) negligence, or
any act or omission that Employee believed in good faith to have been
in or not opposed to the interests of the Company.
"Change in Control" means the occurrence of any one of the following
events: (a) any consolidation, merger or other similar transaction involving
IFX, following which the stockholders of IFX immediately prior to such
transaction fail to hold more than 50% of the outstanding voting securities of
the continuing or succeeding corporation in substantially the same proportions,
or which contemplates that all or substantially all of the business and/or
assets of IFX will be controlled by another corporation; (b) any sale, lease,
exchange or transfer (in one transaction or series of related transactions) of
all or substantially all of the assets of IFX; (c) approval by the stockholders
of IFX of any plan or proposal for the liquidation or dissolution of IFX, unless
such plan or proposal is abandoned within 60 days following such approval; (d)
the acquisition by any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934), or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the outstanding shares of
voting stock of IFX; provided, however, that for purposes of the foregoing,
"person" excludes UBS Capital Americas III, L.P., UBS Capital, LLC, Xxx X.
Xxxxx, the Casty Grantor Subtrust, International Technology Investments, LC or
any of their Affiliates, and any underwriter purchasing shares of IFX with the
intent of reselling them, or (e) if, during any period of 24 consecutive
calendar months commencing on the date of this Agreement, those individuals (the
"Continuing Directors") who either (i) were directors of IFX on the first day of
each such period, or (ii) subsequently became directors of IFX and whose actual
election or initial nomination for election subsequent to that date was approved
by a majority of the Continuing Directors then on the board of directors of IFX,
cease to constitute a majority of the board of directors of IFX.
"Common Stock" means shares of common stock, par value $.02 per share, of
IFX.
"Disability" means disability as defined in Employer's disability insurance
plan then in effect.
"Equity Value" shall mean (i) in the case of the sale, exchange or purchase
of equity securities of Employer, the total net consideration paid for such
securities; and (ii) in the case of a sale or disposition of assets of Employer
and its subsidiaries, the total net consideration paid for such assets.
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"Involuntary Termination" means if Employer terminates Employee for any
reason other than Cause or if Employee terminates his employment with Employer
(a) within 30 days after Employer materially reduces Employee's duties and
responsibilities hereunder; (b) upon material breach of this Agreement by
Employer which remains uncured for 30 days following notice thereof from
Employee to Employer, provided that Employee gives notice of termination within
5 days of expiration of such thirty day period; (c) the failure to nominate or
elect Employee as President, Chief Executive Officer or Chief Operating Officer
of IFX; (d) causing or requiring Employee to report to anyone other than the
Board or any Chief Executive Officer of Employer appointed from time to time by
the Board; (e) assignment of duties materially inconsistent with his position
and duties described in this Agreement; (f) the failure of IFX to assign this
Agreement to a successor to IFX or the failure of a successor to IFX to
explicitly assume and agree to be bound by this Agreement; (g) requiring
Employee to be principally located at any office or location more than 50 miles
from IFX's current office in Miami Lakes, Florida; or (h) diminution of
Employee's compensation package without Employee's express written consent;
provided, however, that in the event such breach is curable but Employer is
unable to cure such breach within such five-day period, then any such breach
shall not be deemed to justify Employee's "Involuntary Termination" hereunder so
long as Employer is diligently and in good faith pursuing a cure and such breach
is cured no later than 30 days following receipt of the foregoing written notice
from Employee.
"Liquidity Event" means the consummation of a transaction for consideration
consisting of cash or Unrestricted Marketable Securities, whether in a single
transaction or in a series of related transactions, that are consummated
contemporaneously (or consummated pursuant to contemporaneous agreements), with
an independent third party or a group of independent third parties pursuant to
which such party or parties (a) acquire more than 50% of the outstanding voting
stock of the Employer determined on a fully diluted basis, or (b) acquire assets
constituting all or substantially all of the assets of the Employer and its
subsidiaries on a consolidated basis (which shall be deemed the equivalent of
the acquisition of 100% of the voting stock of the Employer on a fully diluted
basis for the purposes hereof); provided, however, that if the consideration for
such transaction consists of restricted securities, a Liquidity Event shall be
deemed to be consummated at such time as at least 75% of such restricted
securities become Unrestricted Marketable Securities.
"Person" means any individual, partnership, corporation, limited liability
company, joint venture, trust, firm, association, unincorporated organization or
other entity.
"Senior Managers" shall mean Xxxx Xxxxxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx
and Xxxxxx Xxxxxx.
"Unrestricted Marketable Securities" means securities which are listed on a
national securities exchange or quoted on the NASDAQ National Market System and
which are freely tradable by the holder thereof without restriction pursuant to
an effective registration statement under the Securities Act or Rule 144(k)
thereunder.
"1998 Plan" means the IFX Corporation 1998 Stock Option and Incentive Plan,
as amended, together with any successor thereto.
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"2001 Plan" means the IFX Corporation 2001 Stock Option Plan, as amended,
together with any successor thereto.
ARTICLE II
TERMS OF EMPLOYMENT
2.1 Employment; Scope of Duties.
(a) Employer hereby continues to employ Employee as President of
Employer to act as chief operating officer of Employer and to manage and
oversee all day-to-day operations of Employer, and Employee hereby accepts
such employment with Employer. In performing his duties hereunder, Employee
shall report solely to, and shall be subject to the supervision of, the
Board of Directors, or any Chief Executive Officer of Employer designated
from time-to-time by the Board of Directors. If requested by the Employer,
Employee shall also serve as interim chief financial officer of the
Employer. Employee shall help to prepare an updated rolling financial
forecast of Employer to be submitted to a committee of the Board of
Directors within 30 days after the close of each month. The updated rolling
financial forecast will include estimates of the previous month's
performance and represent Employee's best view of forecasted results for
the current month. The information to be provided by Employee in the
financial forecast must be reasonably accurate and represent a good faith
effort on the part of Employee to represent the true actual performance of
the Employer.
(b) Employee shall devote his best efforts and full business time and
attention to the performance of services for Employer in accordance with
the terms hereof. During the Term (as defined in Section 2.4), Employee
shall not engage in any other business or professional activities, either
on a full-time or part-time basis, as an employee, consultant or in any
other capacity, whether or not he receives any compensation therefor,
without the prior written consent of Employer's Board of Directors;
provided, however, that nothing herein shall prevent Employee from (i)
making and managing personal investments consistent with Section 3.3 of
this Agreement, (ii) from engaging in community and/or charitable
activities, so long as such activities, either singly or in the aggregate,
do not interfere with the proper performance of Employee's responsibilities
to Employer, or (iii) being involved as an officer, director, employee or
consultant of ePagos, Inc., or any subsidiary or Affiliate of Employer
(including but not limited to Xxxxxxx.xxx, Inc.).
2.2 Compensation.
(a) As compensation for Employee's services hereunder during the Term,
Employer shall pay to Employee from and after the date hereof an annual
salary of $175,000 (the "Salary"), less applicable income tax withholdings.
The Salary shall be payable in equal semi-monthly installments in
accordance with Employer's customary compensation policies. If, during the
term of this Agreement, the Employee should be prevented from performing
his duties by reason of Disability, amounts payable by
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Employer hereunder shall be reduced by the amounts payable under the
Employer's disability insurance policy.
(b) In addition to the Salary, effective with the entering into of
this Agreement, Employer will pay a cash bonus to Employee of $35,000.
(c) In addition to the above payments, in the event of a Liquidity
Event, provided that Employee is employed by Employer at the time of such
Liquidity Event or if Employee was Involuntarily Terminated within 90 days
prior to the commencement of or during the process leading to such
Liquidity Event, Employer shall pay a bonus to Employee (a "Targeted
Bonus") if the Equity Value paid with respect to such Liquidity Event,
without regard to any payment of a Targeted Bonus to Employee or any other
Senior Manager is at least $30 million, as determined in conjunction with
the Liquidity Event. The amount of the Targeted Bonus to be paid to
Employee will equal 24.75 % of the Total Senior Management Bonus Pool (as
defined below). The "Total Senior Management Bonus Pool" with respect to a
Liquidity Event shall equal 2.5% of the Equity Value paid with respect to
such Liquidity Event, prior to the determination of the Total Senior
Management Bonus Pool; provided, however, that if the Equity Value equals
or exceeds $100 million prior to the determination of any Total Senior
Management Bonus Pool, then the Total Senior Management Bonus Pool shall
equal $2.5 million plus 5% of that portion of the Equity Value in excess of
$100 million. If stockholders of Employer receive non-cash consideration in
connection with a Liquidity Event, then an allocable portion of the
Targeted Bonus shall be paid to Employee in the form of such non-cash
consideration, with the amount of such non-cash consideration to be paid to
Employee in the same ratio that UBS Capital Americas III, L.P. and UBS
Capital LLC receive cash and non-cash consideration (i.e., if the
consideration to be received by such holders is half cash and half stock,
then the Targeted Bonus will be paid in the form of half cash and half
stock). In connection with a Liquidity Event in which non-cash
consideration is paid, the Employer shall cause the acquiring entity to
expressly assume the obligation to pay such non-cash consideration as
provided above. For the purposes of this Section 2.2(c), "commencement"
shall mean (i) in the event that a Liquidity Event constitutes an asset
sale or statutory merger, the adoption by Employer's Board of Directors of
a resolution to pursue either the sale of Employer's assets or the
statutory merger, as the case may be, and (ii) in the event that a
Liquidity Event constitutes a sale of stock of the Employer, the taking of
affirmative steps by the controlling stockholder(s) of Employer to sell
stock of Employer in a transaction that would constitute a Liquidity Event.
(d) UBS Capital Americas III, L.P. and UBS Capital LLC covenant that,
in connection with the sale of their shares of Employer in a transaction in
which the sale of such shares would constitute a Liquidity Event and in
which non-cash consideration is paid, they will cause the acquiring entity
to agree to pay the non-cash portion of the Targeted Bonus as provided
above.
(e) In addition to the Salary and bonuses, Employee shall be granted
Options as shown on Exhibit A hereto. The Options shall be evidenced by a
standard option agreement between Employer and Employee in a form approved
by the Compensation
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Committee or the Board of Directors of Employer and are in addition to
options previously granted to Employee under any prior employment agreement
between Employer and Employee.
(f) Employee may be entitled to receive an annual cash bonus based on
recommendations of Employer's Chief Executive Officer and Employer's
Compensation Committee, and based on Employer's performance as it relates
to the proposed budget for the fiscal year. Within 30 days after the start
of each subsequent fiscal year, Employer shall transmit to Employee a copy
of the proposed budget for such fiscal year, as approved by Employer's
Board of Directors. Whether or not to award a cash bonus in any year and
the amount thereof shall be in the sole discretion of the Board of
Directors.
(g) In addition to all other payments hereunder, Employee is hereby
granted the vested right to receive 11,667 shares of Employer's Series E
Preferred Stock (as defined below), less applicable withholding; provided,
however, that such shares shall not actually be issued to Employee and
Employee shall have no right to receive such shares until immediately prior
to the first to occur of: a) a Change of Control of Employer, b) a
Liquidity Event of Employer, or c) a Liquidation of Employer, as determined
under the Certificate of Designation creating the Series E Preferred Stock
of Employer. Prior to the first to occur of any such events, Employer shall
file a Certificate of Designation for the Series E Preferred Stock if same
has not already been done.
2.3 Employee Benefits.
(a) Employee shall be entitled to such paid holidays and vacation time
as is consistent with Employer's standard holiday and vacation policy for
executive employees of Employer.
(b) Subject to Employer's rules, policies and regulations as in effect
from time to time (and subject to applicable eligibility requirements,
including a minimum employment period), Employee shall be entitled to (i)
group life insurance, disability or accident, death or dismemberment
insurance, (ii) medical and/or dental insurance program; provided that
regardless of the payment for other employees, Employee's premiums for
himself and his family shall be paid in full by Employer and shall be for a
preferred provider plan or similar plan, (iii) 401(k) benefit plan, if and
when Employer establishes such a plan, (iv) other employee benefits that
Employer may, in its sole discretion, make generally available to employees
of Employer of the same level and responsibility as Employee, (v) all cell
phone bills (provided that substantially all calls are made for business
related to the Employer), (vi) a car allowance of $750 per month, (vii)
high-speed internet access from Employee's principal residence.
2.4 Term. Employee's employment pursuant to the Prior Agreement commenced
on May 7, 2001, and shall continue in effect for one (1) year from the date
hereof unless otherwise terminated in accordance with Section 2.5. Commencing on
the date hereof, the Term shall continue to automatically be extended each day
by one day, until a date which is one (1) year following the first date, if any,
that Employer delivers to Employee or Employee delivers to Employer, as the case
may be, written notice that the Term will not be automatically extended.
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The period of time during which Employee remains employed by Employer pursuant
to this Section 2.4 is referred to herein as the "Term."
2.5 Termination of Employment.
(a) Disability.
(i) If during the term of this Agreement, the Employee should be
prevented from performing his duties by reason of Disability for
a continuous period greater than 180 days, Employer may terminate
the Employee's employment hereunder by giving written notice
thereof to the Employee, effective on the date set forth in the
notice (which date shall be not less than 15 business days after
the notice is given). For purposes hereof, a continuous period of
Disability shall not be deemed interrupted until the Employee
returns to substantially full time work for a period of at least
30 days.
(ii) If termination of employment results or occurs due to Disability
under this Section 2.5(a), Employee shall receive no other
compensation hereunder; provided, however, that until Employee
receives disability insurance payments under Employer's
disability insurance coverage, Employee shall receive his Salary.
All Options held by Employee under the 1998 Plan shall vest
immediately upon the date of termination for Disability.
(b) Death.
(i) In the event of the Employee's death during the term of this
Agreement, the Employee's employment hereunder shall be deemed
terminated as of the date of the Employee's death. Employee's
family shall be entitled to receive fully paid health and dental
insurance coverage for one year after Employee's death and all
Options held by Employee under the 1998 Plan shall vest
immediately.
(c) Cause.
(i) This Agreement and the Employee's employment hereunder may be
terminated at any time by the Company for Cause.
(ii) If the Employee's employment is terminated by the Company for
Cause or Employee terminates his employment other than by reason
of death, Disability or an Involuntary Termination, Employee
shall be entitled to no additional payments hereunder and
Employee's Options shall be treated as required under the 1998
Plan and the 2001 Plan.
(d) Involuntary Termination. In the event of an Involuntary
Termination, Employee shall receive the following:
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(i) immediately after the date of termination, a lump-sum amount in
immediately available funds equal to the sum of Executive's
accrued but unpaid Salary;
(ii) an amount equal to one-third (1/3) of Employee's annualized
Salary for the current year of the Term payable semi-monthly over
four (4) months;
(iii) the continuation of the benefits (or, if such benefits are not
available, the after-tax economic equivalent thereof) specified
in Section 2.3(b) to which Employee is entitled as of the date of
termination for six (6) months after the date of the Involuntary
Termination, or, at the election of Employee, cash payment equal
to the value of such benefits payable semi-monthly over four (4)
months; provided that with respect to any benefit to be provided
on an insured basis, such value shall be the present value of the
premiums expected to be paid for such coverage, and with respect
to other benefits, such value shall be the present value of the
expected net cost to the Company of providing such benefits;
(iv) all options held by Employee under the 1998 Plan shall vest
immediately;
(v) all contractual restrictions on the transfer, sale or pledge of
the common stock held by the Employee will be immediately
extinguished and released; and
(vi) the vested right to receive 24,300 shares of Employers' Series E
Convertible Preferred Stock, with such stock to have the terms
set forth in the Amended and Restated Put Agreement dated as of
August 15, 2002, by and among Employer, UBS Capital Americas III,
L.P. and UBS Capital LLC ("Series E Preferred Stock"), less
applicable withholding; provided, however, that such shares shall
not actually be issued to Employee and Employee shall have no
right to receive such shares until immediately prior to the first
to occur of: a) a Change of Control of Employer, b) a Liquidity
Event of Employer, or c) a Liquidation of Employer, as determined
under the Certificate of Designation creating the Series E
Preferred Stock of Employer. Prior to the first to occur of any
such events, Employer shall file a Certificate of Designation for
the Series E Preferred Stock if same has not already been done.
(e) Termination After a Change of Control. If an Involuntary
Termination occurs within one (1) year after a Change of Control, then
Executive shall receive the payments required by Section 2.5(d), except
that for purposes of Section 2.5(d)(ii), Executive shall receive
seventy-five percent (75%) of Employee's annualized Salary in the year of
the Change of Control payable semi-monthly over nine (9) months.
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(f) Other Termination Benefits. Other than any amounts or benefits
payable upon a Termination of Employment hereunder, Executive shall, except
as otherwise specifically provided herein, not be entitled to any payments
or benefits provided hereunder or under the terms of any plan, policy or
program of the Company or as otherwise required by applicable law.
ARTICLE III
COVENANTS AND AGREEMENTS
3.1 Records and Confidential Data.
(a) Employee acknowledges that, in connection with the performance of
his duties hereunder, Employer and its Affiliates will make available to
Employee, and/or Employee will have access to, certain Confidential
Information (as defined below) of Employer and its Affiliates. Employee
acknowledges and agrees that any and all Confidential Information learned
or obtained by Employee during the course of his employment by Employer or
otherwise, whether developed by Employee alone or in conjunction with
others or otherwise, shall be and is the property of Employer and its
Affiliates. Employee shall keep all Confidential Information confidential
and shall not use any Confidential Information in any manner other than in
connection with Employee's discharge of his duties hereunder.
(b) Following the first to occur of the termination of Employee's
employment hereunder, or as soon as reasonably possible after Employer's
written request, Employee shall return to Employer all written Confidential
Information which has been provided to Employee and Employee shall destroy
all copies of any analyses, compilations, studies or other documents
prepared by Employee or for Employee's use containing or reflecting any
Confidential Information. Within five business days after receipt of such
request by Employee, Employee shall, upon written request of Employer,
deliver to Employer a notarized document certifying that such written
Confidential Information has been returned or destroyed in accordance with
this Section 3.1(b).
(c) For purposes of this Agreement, "Confidential Information" shall
mean all confidential and proprietary information of Employer and/or its
Affiliates, including, without limitation, confidential and proprietary
information that is derived from or regarding reports, investigations,
experiments, research, trade secrets, work in progress, web site drawing,
designs, plans, proposals, requests for proposals, bids, codes, marketing
and sales programs, acquisition targets or strategies, information
regarding subscribers or web site viewers, client lists, client mailing
lists, supplier lists, financial projections, cost summaries, payor
information, pricing formulae, marketing studies relating to prospective
business opportunities and all other confidential and proprietary materials
or information prepared for or by Employer and/or any of its Affiliates.
For purposes of this Agreement, Confidential Information shall not include
and Employee's obligations under this Section 3.1 shall not extend to (i)
information which is generally available to the public, (ii) information
obtained by Employee from Persons not under
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agreement to maintain the confidentiality of the same, and (iii)
information which is required to be disclosed by law or legal process
(after giving Employer prior written notice thereof and an opportunity to
contest such disclosure).
3.2 Inventions and Other Matters.
(a) Employee agrees that all, inventions, discoveries or improvements
made during the period of Employee's employment with Employer, including,
without limitation, computer software (including source code, operating
systems and specifications, data, data bases, files documentation and other
materials related thereto), HTML or other scripts, web site designs, art
work, visual images, programming code and programs, processes, uses,
apparatuses, specialized information relating in any way to or that is
useful in the business or products of Employer or Employer's actual or
demonstrably anticipated research or development, designs or compositions
of any kind that Employee, individually or with others, may originate or
develop while employed by Employer (collectively, "Inventions"), belong to
and shall be the sole property of Employer and constitute ---------- and
shall constitute works specially ordered or commissioned as "works made for
hire" under the United States Copyright Act and other applicable law.
Without limiting the foregoing, Employee hereby assigns and transfers to
Employer all rights of whatever nature that Employee may have, including,
without limitation, any patent, trade secret, trademark or service xxxx
rights (and any goodwill appurtenant thereto), any rights of publicity and
any right, title and interest in any copyright and any right that may affix
under any copyright law now or hereinafter in force and effect in the
United States of America or in any other country or countries, in and to
any Invention. Employee acknowledges and agrees that Employer shall have
the royalty-free right to use in its businesses, and to make and sell
products, processes, programs, systems designs, methods, formulas,
apparatus, techniques, and services derived from any Inventions (whether or
not patentable or copyrightable), as well as all improvements thereof or
know-how related thereto. The provisions of this Section 3.2 shall survive
termination of this Agreement for any reason.
(b) For purposes of this Agreement, an Invention shall be deemed to
have been "made during the period of Employee's employment" if, during such
period, the Invention was conceived, in part or in whole, or first actually
reduced to practice. Employee agrees that any patent, copyright or trade
xxxx application (i) covering intellectual property that relates to
services performed by Employee hereunder or that is applicable to those
products or services of Employer that were within the scope of Employee's
responsibilities hereunder, and (ii) that is filed by or for the benefit of
Employee or any of his Affiliates within one (1) year after termination of
Employee's employment shall be presumed to relate to an Invention made
during the term of his employment and Employee shall have the burden of
proof to prove otherwise.
(c) This Section 3.2 shall not apply to an Invention for which no
equipment, supplies, facilities or Confidential Information (as defined
below) of Employer was used and that was developed entirely on Employee's
own time, unless (i) the invention relates or is applicable to the services
performed by Employee hereunder or that is applicable to those services or
products of Employer that were within the scope of Employee's
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responsibilities hereunder, or (ii) results from any work relating to the
Business that was performed, caused to be performed, or supervised by
Employee for or on behalf of Employer.
(d) Employee agrees, without further consideration, to (i) promptly
disclose each such Invention to Employer, to Employee's immediate
supervisor and to such other individuals as Employer may direct, (ii)
execute and to join others in executing such applications, assignments and
other documents as may be necessary or convenient to vest in Employer, or
its designee, full title to each such Invention and as may be necessary or
convenient to obtain United States and foreign patents and copyrights
thereon, to the extent Employer may so choose in its sole discretion, (iii)
testify in any legal proceeding relative to such Invention whenever
requested to do so by Employer, and (iv) furnish all facts relating to such
Inventions or the history thereof.
(e) Employee agrees that he will not at any time, except as authorized
or directed by Employer, publish or disclose any information or knowledge
concerning any Inventions.
3.3 Non-Competition.
(a) Employer and Employee recognize that Employee has been retained to
occupy a position of trust that constitutes part of the professional,
management and executive staff of Employer. Employee, for and in
consideration of the payments, rights and benefits provided herein, agrees
that so long as he is employed by Employer and, if Employer terminates
Employee's employment for Cause, in the event of an Involuntary Termination
or if Employee terminates his employment with Employer for any reason other
than pursuant to an Involuntary Termination, then during the period of time
that Employee is receiving cash severance payments under Section 2.5(d)(ii)
or 2.5(e), Employee shall not (i) work or act as an officer or director of
or compensated consultant to, (ii) assist, (iii) own, directly or through
any Affiliate or joint venture, a 10% or greater interest in, or (iv) make
a financial investment (other than a passive, economic investment), whether
in the form of equity or debt, in any business that is directly competitive
with the Business in the United States, Latin America or in any other
market in which Employer is conducting the Business at the time Employee's
employment with Employer is terminated.
(b) Notwithstanding the foregoing, nothing herein shall prohibit
Employee from holding ten percent (10%) or less of any class of voting
securities of any entity whose equity securities are listed on a national
securities exchange or regularly traded in the over-the-counter market and
for which quotations are readily available on the National Association of
Securities Dealers Automated Quotation system.
(c) If Employer terminates Employee's employment for Cause or if
Employee terminates his employment with Employer for any reason other than
pursuant to an Involuntary Termination, then for a period of one (1) year
thereafter, Employee shall promptly notify Employer of each employment or
agency relationship entered into by Employee, and each corporation,
proprietorship or other entity formed or used by
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Employee, the business of which is directly competitive with the Business.
The provisions of this Section 3.3 shall survive termination of this
Agreement for any reason.
3.4 Non-Solicitation and Non-Interference.
(a) Employee acknowledges that Employer has invested substantial time
and effort in assembling its present staff of personnel. Employee agrees
that so long as he is employed by Employer and then for a period of one (1)
year thereafter, Employee shall not, directly or indirectly, employ,
solicit for employment, or advise or recommend to any other Person that
such other Person employ or solicit for employment, any of Employer's
employees or recommend to any employee of Employer that he/she cease to be
employed by Employer; provided that the restrictions set forth in the
immediately preceding sentence shall not apply to any solicitation directed
at the public in general e.g., advertisements in publications of general
circulation, etc. or to inquiries for employment that were unsolicited,
directly or indirectly, by Employee.
(b) Employee acknowledges that all customers of Employer, which
Employee has serviced or hereafter services during Employee's employment by
Employer and all prospective customers from whom Employee has solicited or
may solicit business while in the employ of Employer, shall be solely the
customers of Employer. Employee agrees that so long as he is employed by
Employer and for a period of one (1) year thereafter, Employee shall not
either directly or indirectly solicit business, as to products or services
competitive with the Business, from any of Employer's customers with whom
Employee had contact during his employment with Employer.
(c) Employee agrees that so long as he is employed by Employer and for
a period of one (1) year thereafter, Employee shall not, directly or
indirectly, (i) intentionally disrupt or attempt to disrupt or terminate
any relationship between Employer and any of its Business suppliers,
clients or employees, or (ii) disparage, malign or discredit the name or
reputation of Employer to any customers, clients or suppliers of the
Business. Employee agrees that for so long as he is employed by Employer
and for a period of one (1) year thereafter, he will not influence or
attempt to influence any of the customers or clients of Employer to cease
doing business with Employer.
3.5 Restrictions Reasonable. Employee agrees that the restrictions
contained in Sections 3.3 and 3.4 are reasonable as to time and geographic scope
because of the nature of the Business and Employee agrees, in particular, that
the geographic scope of this restriction is reasonable because companies in the
same industry as the Business compete on an international basis. Employee
acknowledges that Employer is in direct competition with all other companies
that provide services and products similar to the Business products and services
throughout the United States and Latin America and, because of the nature of the
Business, Employee expressly agrees that the covenants contained in Sections 3.3
and 3.4 cannot reasonably be limited to any smaller geographic area. The
provisions of Sections 3.3 and 3.4 shall survive termination of this Agreement
for any reason.
12
3.6 Prior Obligations. Employee represents and warrants that (a) Employee
has no obligation of confidence or other commitments to any previous employer or
any others that conflict with this Agreement or restrict Employee's field of
activities, and (b) no other agreement to which Employee is subject will
conflict with, prevent, be breached by, interfere with or in any manner affect
the terms and conditions of this Agreement.
3.7 Injunctive Relief. Employee acknowledge that damages would be an
inadequate remedy for Employee's breach of any of the provisions of Sections
3.1, 3.2, 3.3 and/or 3.4 of this Agreement, and that breach of any of such
provisions will result in immeasurable and irreparable harm to Employer.
Therefore, in addition to any other remedy to which Employer may be entitled by
reason of Employee's breach or threatened breach of any such provision, Employer
shall be entitled to seek and obtain a temporary restraining order, a
preliminary and/or permanent injunction, or any other form of equitable relief
from any court of competent jurisdiction restraining Employee from committing or
continuing any breach of such Section, without the necessity of posting a bond.
It is further agreed that the existence of any claim or cause of action on the
part of Employee against Employer, whether arising from this Agreement or
otherwise, shall in no way constitute a defense to the enforcement of the
provisions of Sections 3.1, 3.2, 3.3 and/or 3.4 of this Agreement.
3.8 Subordination.
(a) If a Bankruptcy Event (as defined below) shall occur, then
Employee agrees that all payments due to or claims (the "Subordinated
Claims") of Employee arising from or in connection with the termination of
Employee's employment with Employer for any reason, including without
limitation the right to receive payments under Section 2.5(d)(ii), Section
2.5(d)(iii) or Section 2.5(e), whether accrued or arising in the future,
shall be subordinated in payment and priority to all payments due or to
become due under the Convertible Notes (as defined below) to the Holders
(as defined below). For purposes of this Agreement, a "Bankruptcy Event"
shall mean any dissolution, winding up, liquidation, readjustment,
reorganization, or other similar proceeding relating to Employer or its
assets, whether voluntary or involuntary, partial or complete, and whether
in bankruptcy, insolvency or receivership, or upon an assignment for the
benefit of creditors, or any other marshalling of the assets and
liabilities of Employer.
(b) "Convertible Notes" shall mean those certain Convertible
Promissory Notes issued on the date hereof to UBS (or, with respect to
ROF/IFX, LLC, a convertible promissory note issued as Qualified Financing
Securities with respect to that Convertible Promissory Note issued to
ROF/IFX, LLC on September 9, 2002), including any amendments, extensions,
modifications or consolidations of such Convertible Promissory Notes and
including convertible notes evidencing up to an additional $3.1 million in
principal amount of convertible indebtedness which may be issued with the
consent of UBS on substantially the same terms as such Convertible
Promissory Notes on or before September 1, 2003 (holders of Convertible
Notes to be referred to herein as the "Holders"). The Holders shall not be
prejudiced in their rights under this Section 3.8 by any act or failure to
act of the Holders or delay in the exercise of any right or remedy, and no
such failure to act or delay shall preclude any further exercise of such
rights by
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Holders, nor shall any modification of this Section 3.8 by Employer and
Employee be binding upon the Holders except as expressly set forth in a
writing signed and delivered on behalf of those Holders holding a majority
of the outstanding principal amount of the Convertible Notes. This Section
3.8 shall inure to the benefit of the Holders and their respective
successors and assigns who shall be third party beneficiaries hereof.
(c) Without limiting the foregoing or any other provision hereof, if a
Bankruptcy Event shall occur then: (a) Employer may not make and Employee
may not receive, directly or indirectly, make any payment, whether in cash,
property, securities or otherwise, in respect of any Subordinated Claims
unless and until all amounts owing to the Holders under or pursuant to the
Convertible Notes have been indefeasibly paid in full in immediately
available funds and (b) upon any subsequent distribution of assets of
Employer: (i) the Holders shall first be entitled to receive indefeasible
payment in full in immediately available funds of all amounts owing to the
Holders under or pursuant to the Convertible Notes (including, without
limitation, interest accruing after the occurrence of any Bankruptcy Event,
whether or not such interest is an allowed claim against Employer) before
Employee is entitled to receive any payment, whether in cash, property or
securities, in respect of any amount owing under or pursuant to the
Subordinated Claims, and (ii) any payment or distributions of assets of
Employer of any kind or character, whether in cash, property or securities,
to which Employee would be entitled in respect of the Subordinated Claims
except for the provisions hereof, shall be paid by the liquidating trustee
or agent or other person or entity making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or other
trustee or agent, directly to the Holders (in such manner as a majority in
principal amount shall so direct) for application to amounts owing to the
Holders under or pursuant to the Convertible Notes until indefeasibly paid
in full in immediately available funds. In the event that notwithstanding
the foregoing Employer shall make any payment to Employee in respect of
Subordinated Claims or Employee shall receive any payment in respect of
Subordinated Claims at a time when such payment is not permitted pursuant
to the foregoing, such payment shall be held by Employee in trust for the
benefit of, and shall be paid forthwith over and delivered to, the Holders
(in such manner as a majority in principal amount shall so direct) for
application to amounts owing to the Holders under or pursuant to the
Convertible Notes until indefeasibly paid in full in immediately available
funds. In any bankruptcy, insolvency or similar proceeding with respect to
Employer after the occurrence of a Bankruptcy Event, Employee irrevocably
authorizes the Holders (acting with the consent of Holders holding a
majority in principal amount of the Convertible Notes): (i) to prove and
enforce any claims of Employee in respect of obligations owed by Employer
to Employee which are Subordinated Claims either in the name of the Holders
or in the name of Employee as the attorney-in-fact of Employee; (ii) to
vote claims comprising obligations owed by Employer to Employee which are
Subordinated Claims and to accept or reject on behalf of Employee any plan
proposed in connection with such proceeding; (iii) to accept and execute
receipts for any payment or distribution made with respect to any and all
obligations owed by Employer to Employee which are Subordinated Claims;
(iv) to take action and to execute any instruments necessary to effectuate
the foregoing either in the name of the Holders or in the name of Employee
as its attorney-in-fact. Notwithstanding the rights and remedies available
to Employee under this Agreement, at law, in equity or otherwise, Employee
agrees that
14
following the occurrence of a Bankruptcy Event Employee will not, and will
not be entitled to, exercise any Remedy (as defined below) against Employer
in respect of Subordinated Claims. "Remedy" shall mean and include the
taking of any action by Employee to enforce the obligations of Employer in
respect of the Subordinated Claims or to collect payment of any amount
owing in respect of the Subordinated Claims, including, without limitation,
the commencement of any judicial, arbitral or other action or proceeding
(including, without limitation, any bankruptcy, insolvency or similar
proceeding) against Employer or the joining in any such action or
proceeding.
3.9 Directors and Officers Insurance. Employer agrees to use reasonable
commercial efforts to modify its existing directors and officers insurance
policies (the "Policies") to provide that reimbursement of expenses or other
payments to be made by the insurer under the applicable Policy to or for the
benefit of directors or officers is paid directly to the applicable officer or
director and not to Employer and shall further provide that Employer shall not
be a named insured under such Policies. In addition, the Employer agrees to use
commercially reasonable efforts to maintain officers and directors insurance
policies on terms substantially similar to those of the Policies during the
period during which the Employee is a director or officer of the Employer and
for a period of no less than two (2) years thereafter. Notwithstanding the
foregoing, the obligations set forth in this Section 3.9 shall be subject to the
condition that compliance therewith does not substantially increase the
aggregate cost of directors and officers insurance above the current aggregate
cost of the Policies or reduce the scope of coverage below the current scope
covered under the Policies. In the event that the Employer is no longer a public
company, then, notwithstanding the foregoing, the Employer shall be entitled to
terminate and/or reduce the scope of director and officer insurance coverage to
that which is customary for similarly situated private companies that previously
were public companies.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (a) when made, if delivered personally, (b)
three business days after being mailed by certified or registered mail, postage
prepaid, return receipt requested, or (c) two business days after delivery to a
reputable overnight courier service, to the parties, their successors in
interest or their assignees at the following addresses, or at such other
addresses as the parties may designate by written notice in the manner
aforesaid:
To Employer:
IFX Corporation
c/o IFX Communications Ventures Inc.
15050 N.W. 00 Xxxxx - Xxxxx 000
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: President
15
To Employee, to his home address as recorded in the payroll records of
Employer from time to time.
4.2 Governing Law. This Agreement shall be governed as to its validity and
effect by the internal laws of the State of Florida, without regard to its rules
regarding conflicts of law.
4.3 Agreement To Arbitrate.
(a) Employer and Employee agree that any disputes that arise between
Employee and Employer (or any of Employer's officers, directors,
stockholders, supervisors, employees, agents, Affiliates or successors),
excluding disputes arising out of Section 3.1, 3.2, 3.3 or 3.4, that cannot
be resolved informally shall be decided by submission of the dispute to
binding arbitration before a sole neutral arbitrator who is a retired
federal judge pursuant to the American Arbitration Association Commercial
Arbitration Rules governing such proceedings, and not by a lawsuit or by
resort to court process, except as specifically set forth below. Both
parties acknowledge and agree that they are giving up their respective
constitutional rights to have any such dispute decided in a court of law
before a jury, and instead are accepting the use of the arbitration
process. This Section 4.3(a) applies to any and all disputes, including, by
way of example only and not limited to, disputes regarding termination of
Employee's employment; discrimination and unlawful harassment of any kind
(including, without limitation, claims arising under Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. (S)2000(e) et seq. and the Civil
Rights Act of 1991; the Age Discrimination in Employment Act, as amended,
29 U.S.C. (S)621, et seq.; the Americans with Disabilities Act of 1990, 42
U.S.C. (S)12101 et seq.; the Family and Medical Leave Act of 1993, 29
U.S.C. (S)2612 et seq.; and all applicable state and local
anti-discrimination laws and constitutional provisions); disputes arising
under any other applicable federal, state or local labor statutes,
regulations or orders; disputes regarding assault and battery; negligent
supervision; defamation; invasion of privacy; wages and overtime; and
disputes regarding the formation and enforceability of this Section 4.3(a).
The following types of disputes are excluded from the scope of coverage of
this Section 4.3(a): (i) workers' compensation claims by Employee for
on-the-job injuries; and (ii) any and all claims by Employer against
Employee, including claims for injunctive relief, arising out of Employee's
breach or threatened breach of Section 3.1, 3.2, 3.3 or 3.4 of this
Agreement.
(b) General Rules of Arbitration. Either party shall have the right to
have counsel represent him/it at the arbitration hearing and in
pre-arbitration proceedings. Pre-arbitration discovery shall be permitted
in accordance with the Federal Rules of Civil Procedure, except that (i)
there shall be no limit on the number of depositions that may be noticed by
either party, and (ii) in connection with any pre-arbitration disclosure of
expert testimony in accordance with Rule 26(a)(2), the timing of the expert
disclosure shall be set by the arbitrator.
(c) Authority of Arbitrator. The arbitrator shall have the authority
to (i) resolve any discovery disputes that arise between the parties; (ii)
resolve any dispute relating to the interpretation, applicability or
enforceability of this Section 4.3; and (iii) entertain a motion to dismiss
and a motion for summary judgment, applying the standards
16
governing such motions under Federal Rule Of Civil Procedure 12(b)(6) and
Rule 56. The arbitrator is required to render his decision in writing, with
an opinion stating the bases of his decision. Either party has the right to
file a post-arbitration brief, which shall be considered by the arbitrator
(d) Payment of Costs and Fees. Each party shall bear its own costs and
attorneys' fees incurred in connection with the arbitration. The arbitrator
shall have the discretion to award costs to the prevailing party. The
arbitrator's fees shall be borne equally by the parties. Each party shall
post his or its portion of the arbitrator's anticipated fee prior to the
commencement of the arbitration.
(e) Appeals. Either side shall have the right to appeal the
arbitrator's decision by applying to a Court (as defined in Section 4.4)
for an order vacating the award for any of the reasons set forth in 9
U.S.C. (S)10, or on the basis that the arbitrator has made a mistake of law
or fact. The arbitration decision shall stand if it is supported by
substantial evidence.
4.4 Jurisdiction; Service of Process. Each of the parties hereto agrees
that any action or proceeding initiated or otherwise brought to judicial
proceedings by either Employee or Employer concerning the subject matter of this
Agreement that is not subject to Section 4.3, shall be litigated in the United
States District Court for Dade County, Florida or, in the event such court
cannot or will not exercise jurisdiction, in the state courts of the State of
Florida covering Miami, Dade County, Florida (the "Courts"). Each of the parties
hereto expressly submits to the jurisdiction and venue of the Courts. Each party
hereto waives any claim that the Courts are an inconvenient forum or an improper
forum based on lack of venue or jurisdiction. Each party shall bear its own
costs and attorneys' fees incurred in connection with any such actions or
proceedings.
4.5 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of (a) the heirs, executors and legal representatives of
Employee, upon Employee's death or incapacity, and (b) any successor of
Employer, and any such successor shall be deemed substituted for Employee or
Employer, as the case may be, under the terms hereof for all purposes; provided,
however, that any such assignment shall not relieve Employer from its
obligations hereunder. As used in this Agreement, "successor" shall include any
Person that at any time, whether by purchase, merger, consolidation or
otherwise, directly or indirectly acquires a majority of the assets, business or
stock of Employer; provided, however, that no acquisition of the stock of
Employer by UBS Capital Americas III, L.P., UBS Capital LLC or any of their
respective Affiliates (collectively, "UBS") shall cause UBS to be treated as a
"successor" hereunder.
4.6 Integration. This Agreement, the Plan and any option agreement Employee
will be required to execute, constitute the entire agreement between the parties
with respect to all matters covered herein, including but not limited to the
parties' employment relationship and Employee's entitlement to compensation,
commissions and benefits from Employer or any of its Affiliated companies and/or
the termination of Employee's employment. This Agreement supersedes all prior
oral or written understandings and agreements relating to its subject matter and
all other business relationships between Employer and/or its Affiliated
companies.
17
4.7 No Representations. No Person has made or has the authority to make any
representations or promises on behalf of any of the parties which are
inconsistent with the representations or promises contained in this Agreement,
and this Agreement has not been executed in reliance on any representations or
promises not set forth herein.
4.8 Amendments. This Agreement may be modified only by a written instrument
executed by the parties that is designated as an amendment to this Agreement.
4.9 Counterparts. This Agreement is being executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.10 Severability and Non-Waiver. Any provision of this Agreement (or
portion thereof) which is deemed invalid, illegal or unenforceable in any
jurisdiction shall, as to that jurisdiction and subject to this Section, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions thereof in such
jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant shall be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
4.11 Voluntary and Knowledgeable Act. Employee represents and warrants that
he has been represented by independent legal counsel of his own choosing and
that he has read and understands each and every provision of this Agreement and
has freely and voluntarily entered into this Agreement.
4.12 Late Payments. If the Employer fails to pay any amount provided under
this Agreement or any other plan or program sponsored by Employer when due, the
Employer shall pay interest on such amount at a rate equal to (i) the highest
rate of interest charged by the Employer's principal lender plus 200 basis
points, or (ii) in the absence of such a lender, 300 basis points over the prime
commercial lending rate announced by Xxxxxx Trust and Savings Bank on the date
such amount is due or, if no such rate shall be announced on such date, the
immediately prior date on which Xxxxxx Trust and Savings Bank announced such a
rate; provided, however, that if the interest rate determined in accordance with
this Section exceeds the highest legally-permissible interest rate, then the
interest rate shall be the highest legally-permissible interest rate.
4.13 Shares Not Yet Authorized. Employer shall authorize such shares of
Series D Preferred Stock or Series E Preferred Stock as shall be necessary to
issue shares to be received by Employee on any exercise of options to be issued
hereunder, or if sufficient authorized shares do not exist, Employer shall
designate one or more new series of preferred stock (as may be required) having
terms and conditions identical to the Series D Preferred Stock or Series E
Preferred Stock, as the case may be, so that such new series of preferred stock
may be issued in connection with the exercise of the options to purchase Series
D Preferred Stock options or Series E Preferred Stock, as the case may be.
18
4.14 Stockholder Approval. Until such time as stockholder approval for the
issuance to Employee of the options to purchase Series D Preferred Stock is no
longer required under NASDAQ rules and regulations or under any applicable law,
the effectiveness of the provisions to issue to Employee the options to purchase
Series D Preferred Stock (or any successor series of preferred stock, as
provided in Section 4.13 hereof) shall be contingent on the approval of
shareholders of Employer having a majority of the voting power of Employer.
Employer covenants to seek stockholder approval for the issuance of the Series D
Preferred at the next annual meeting of Employer. The Board of Directors of
Employer shall recommend that the shareholders of Employer vote in favor of and
approve the issuance of the options to Employee hereunder. Each of UBS Capital
LLC and UBS Capital Americas III, L.P. agrees to vote in favor of the issuance
of the options to be issued hereunder to Employee.
19
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
EMPLOYER:
IFX CORPORATION
By: /s/ Xxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxx Xxxxxx
Title: CEO
Date: October 31, 2002
EMPLOYEE:
/s/ Xxxx Xxxxxxxxxx
---------------------------
Xxxx Xxxxxxxxxx
Date: October 31, 2002
Solely with respect to Sections 2.2(d) and 4.14.
UBS CAPITAL LLC
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Its: Attorney-in-fact
By: /s/ Xxxx Xxxxx
-----------------------------
Name: Xxxx Xxxxx
Its: Attorney-in-fact
UBS CAPITAL AMERICAS III, L.P.
By: UBS Capital Americas III, LLC
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Its: Partner
By: /s/ Xxxx Xxxxx
-----------------------------
Name: Xxxx Xxxxx
Its: Chief Financial Officer
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EXHIBIT A
1. Effective as of the date hereof, Employee shall be granted an option to
purchase 125,000 shares of Employer's Series D Preferred Stock. The exercise
price for the option is equal to $1.20 per share of Series D Convertible
Preferred Stock, subject to such adjustments for stock splits, dividends,
recapitalizations as are contained in the Convertible Promissory Notes issued to
UBS Capital Americas III, L.P. and UBS Capital LLC dated as of the date hereof
(each a "Convertible Promissory Note"). The option will vest monthly over 24
months starting three (3) months from the date hereof, but will vest immediately
in connection with an Involuntary Termination. The option will be
non-transferable and non-assignable. The options will have a term ending ten
(10) years from the date hereof. Options which are vested may be exercised for
ninety (90) days following Employee's death, Disability or an Involuntary
Termination. If Employee is terminated for Cause or terminates employment other
than as a result of death, Disability or an Involuntary Termination, the option
will cease to be exercisable effective as of the effective date of termination.
Unvested options will terminate immediately as of termination of Employee's
employment with Employer.
