EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of September 23,
2002, by and between LEXENT INC., a Delaware corporation (the "Company") and
Xxxxxx Xxxxxxxx (the "Employee").
W I T N E S S E T H:
WHEREAS the Company desires to induce the Employee to enter into
employment with the Company for the period provided in this Agreement, and the
Employee is willing to accept such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:
1. Employment.
a. The Company hereby agrees to employ the Employee, and the
Employee hereby agrees to accept such employment with the
Company, commencing on September 23, 2002 (the "Commencement
Date") and continuing for the period set forth in Section 2
hereof, all upon the terms and conditions hereinafter set
forth.
b. The Employee affirms and represents that as of the
commencement of his employment by the Company, he was under no
obligation to any former employer or other party which is in
any way inconsistent with, or which imposes any restriction
upon, the Employee's acceptance of employment hereunder with
the Company, the employment of the Employee by the Company, or
the Employee's undertakings under this Agreement.
2. Term of Employment. Unless earlier terminated as provided in this
Agreement, the term of the Employee's employment under this
Agreement shall be for a period beginning on the Commencement Date
and ending on September 22, 2006. The period from the Commencement
Date until September 22, 2006, or, in the event that the Employee's
employment hereunder is earlier terminated as provided herein, such
shorter period, is hereinafter called the "Employment Term" (the
"Employment Term").
3. Duties. The Employee shall be employed as the Executive Vice
President & Chief Financial Officer of the Company. Employee shall
faithfully perform and discharge such duties as inhere in the
positions of Executive Vice President & Chief Financial Officer as
may be specified in the By-laws of the Company with respect to such
positions, and shall also perform and discharge
such other duties and responsibilities consistent with such position
as the Board of Directors of the Company (the "Board of Directors")
and the Chief Executive Officer of the Company shall from time to
time determine. The Employee shall report to the Chief Executive
Officer of the Company. The Employee shall perform his duties
principally at offices of the Company in New York City, New York,
with such travel to such other locations from time to time as the
Chief Executive Officer may reasonably prescribe. Except as may
otherwise be approved in advance by the Board of Directors, and
except during vacation periods and reasonable periods of absence due
to sickness, personal injury or other disability, the Employee shall
devote his full business time throughout the Employment Term to the
services required of him hereunder. The Employee shall render his
business services exclusively to the Company and its subsidiaries
during the Employment Term and shall use his best efforts, judgment
and energy to improve and advance the business and interests of the
Company and its subsidiaries in a manner consistent with the duties
of his position.
4. Compensation.
a. Salary. As compensation for the performance by the Employee of
the services to be performed by the Employee hereunder during
the Employment Term, the Company shall pay the Employee a base
salary at the annual rate of Two Hundred Fifty Thousand
Dollars ($250,000) (said amount, together with any increases
thereto as may be determined from time to time by the Board of
Directors in its sole discretion, being hereinafter referred
to as "Salary"). Any Salary payable hereunder shall be paid in
regular intervals in accordance with the Company's payroll
practices from time to time in effect.
b. Bonus. Provided that Employee is employed by Company on the
last day of the fiscal year (or on September 22, 2006 for the
calendar year 2006), the Employee shall be eligible to receive
bonus compensation from the Company in respect of each fiscal
year (or portion thereof) occurring during the Employment Term
in an amount targeted at 40% of his Salary (pro rated for any
portion of a fiscal year occurring during the Employment Term)
if the Company achieves the target performance objectives
established by the Compensation Committee of the Board of
Directors (the "Compensation Committee") with respect to such
fiscal year, which bonus, if any, shall be payable at the time
bonuses are payable to other Company senior executives. The
Employee shall also be eligible to receive additional bonus
compensation from the Company in respect of each fiscal year
(or portion thereof) occurring during the Employment Term for
exceptional performance as may be determined by the
Compensation Committee in its sole discretion. Notwithstanding
the above, Employee shall be entitled to receive a minimum
bonus of Fifty Thousand and 00/100 Dollars ($50,000) for
fiscal year 2003.
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5. Other Benefits; Options.
a. General. During the Employment Term, the Employee shall:
i. be eligible to participate in employee fringe benefits
and pension and/or profit sharing plans that may be
provided by the Company for its senior executive
employees in accordance with the provisions of such
plans, as may be in effect from time to time;
ii. be eligible to participate in any medical and health
plans or other employee welfare benefit plans that may
be provided by the Company for its senior executive
employees in accordance with the provisions of any such
plans, as may be in effect from time to time;
iii. be entitled to the number of paid vacation days in each
calendar year determined by the Company from time to
time for its senior executive officers, provided that
such number of paid vacation days in each calendar year
shall not be less than twenty (20) work days (four
calendar weeks). The Employee shall also be entitled to
all paid holidays given by the Company to its senior
executive officers;
iv. be entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may
be applicable to senior executive employees from time to
time;
v. be entitled to reimbursement for all reasonable and
necessary out-of-pocket business expenses incurred by
the Employee in the performance of his duties hereunder
in accordance with the Company's normal policies from
time to time in effect; and
vi. be entitled to a monthly car allowance in the amount of
$750.00 in addition to reimbursement for monthly parking
expenses at a parking lot/garage in proximity to the
Company's New York, NY office location.
x. Xxxxx of Initial Options. In connection with the execution and
delivery of this Agreement by the Employee, the Company is
granting to the Employee options to purchase 225,000 shares
("Initial Options") of Company Common Stock, $.001 par value
("Common Stock"), at a purchase price equal to the Fair Market
Value (as defined in (d) below) on the Commencement Date, of
which options to purchase 25% of such shares of Common Stock
shall vest on the Commencement Date and options to purchase
the remaining shares of Common Stock shall vest in thirty-six
equal increments over the thirty-six month period beginning at
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the end of the month following the first anniversary of the
Commencement Date, all as provided in the Stock Option
Agreement of even date herewith between the Company and the
Employee.
c. Intentionally Omitted.
d. Fair Market Value. "Fair Market Value" means as of any date,
the value of Common Stock determined as follows:
i. If the Common Stock is listed on any established stock
exchange or a national market system, including without
limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a
share of Common Stock shall be the closing sales price
for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common
Stock) on the trading day of the day of grant of the
particular Options and as reported in the Wall Street
Journal or such other source as the Compensation
Committee deems reliable;
ii. If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is
regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value
of a share of Common Stock shall be the average between
the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of grant
of the particular Subsequent Options and as reported in
the Wall Street Journal or such other source as the
Compensation Committee deems reliable; or
iii. In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good
faith by the Compensation Committee.
e. Change of Control. If there is a Change of Control of the
Company (as defined below) 50% of all then unvested Initial
Options granted pursuant to Section 5 of this Agreement shall
vest immediately upon completion of the Change of Control, and
the remaining 50% of the unvested Initial Options shall
continue to vest in accordance with the schedule set forth in
Section 5. Notwithstanding, in the event that a Change of
Control results in Employee's termination within three (3)
months after the completion of the Change of Control, all then
remaining unvested Initial Options shall vest immediately upon
Employee's termination. As used hereinabove, "Change of
Control" means the occurrence of any of the following (i) the
Company consolidates with or merges with or into another
person pursuant to the transaction in which the outstanding
securities of the
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Company are converted into or exchanged for cash or other
property of for securities possessing less than 50% of the
voting power of the outstanding securities of the person
surviving such merger or consolidation; (ii) the Company
sells, assigns conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any
persons; or (iii) any "person" or "group" (as such terms are
used in Sections 13(d) and 14 (d) of the Securities and
Exchange Act), other than the holders of the Securities of the
Company as of the date hereof shall, by virtue of ownership of
securities or by agreement or otherwise, be entitled to elect
a majority of the director of the Company.
6. Confidential Information. The Employee hereby covenants, agrees and
acknowledges as follows:
a. The Employee has and will have access to and will participate
in the development of or be acquainted with confidential or
proprietary information and trade secrets related to the
business of the Company and any present or future subsidiaries
or affiliates of the Company (collectively with the Company,
the "Companies"), including but not limited to (i) customer
lists; related records and compilations of information; the
identity, lists or descriptions of any new customers, referral
sources or organizations; financial statements; cost reports
or other financial information; contract proposals or bidding
information; business plans; training and operations methods
and manuals; personnel records; software programs; reports and
correspondence; and management systems, policies or
procedures, including related forms and manuals; (ii)
information pertaining to future developments such as future
marketing or acquisition plans or ideas, and potential new
business locations and (iii) all other tangible and intangible
property, which are used in the business and operations of the
Companies but not made public. The information and trade
secrets relating to the business of the Companies described
hereinabove in this paragraph (a) are hereinafter referred to
collectively as the "Confidential Information", provided that
the term Confidential Information shall not include any
information (A) that is or becomes generally publicly
available (other than as a result of violation of this
Agreement by the Employee), (B) that the Employee receives on
a nonconfidential basis from a source (other than the
Companies or their representatives) that is not known by him
to be bound by an obligation of secrecy or confidentiality to
any of the Companies or (C) that was in the possession of the
Employee prior to disclosure by the Companies.
b. The Employee shall not disclose, use or make known for his or
another's benefit any Confidential Information or use such
Confidential Information in any way except as is in the best
interests of the Companies in the performance of the
Employee's duties under this Agreement. The Employee may
disclose Confidential Information when required by a third
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party and applicable law or judicial process, but only after
providing immediate notice to the Company of any third party's
request for such information, which notice shall include the
Employee's intent to disclose any Confidential Information
with respect to such request.
c. The Employee acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of this
Section 6 would be inadequate and, therefore, agrees that the
Companies shall be entitled to seek injunctive relief in
addition to any other available rights and remedies in case of
any such breach or threatened breach by the Employee;
provided, however, that nothing contained herein shall be
construed as prohibiting the Companies from pursuing any other
rights and remedies available for any such breach or
threatened breach, including, but not limited to,
reimbursement of any amounts paid by Company under Section 8
of this Agreement.
d. The Employee agrees that upon termination of his employment
with the Company for any reason, the Employee shall forthwith
return to the Company all Confidential Information in whatever
form maintained (including, without limitation, computer discs
and other electronic media).
e. The obligations of the Employee under this Section 6 shall,
except as otherwise provided herein, survive the termination
of the Employment Term and the expiration or termination of
this Agreement.
f. Without limiting the generality of Section 12 of this
Agreement, the Employee hereby expressly agrees that the
foregoing provisions of this Section 6 shall be binding upon
the Employee's heirs, successors and legal representatives.
7. Termination of Employment.
a. The Employee's employment hereunder shall be terminated upon
the occurrence of any of the following:
i. death of the Employee;
ii. the Employee's inability to perform his duties on
account of disability or incapacity for a period of one
hundred eighty (180) or more days, whether or not
consecutive, within any period of twelve (12)
consecutive months;
iii. the Company giving written notice, at any time, to the
Employee that the Employee's employment is being
terminated for "Cause" (as defined in (b) below);
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iv. the Company giving written notice, at any time, to the
Employee that the Employee's employment is being
terminated or is not being renewed, other than pursuant
to clause (i), (ii) or (iii) above ("Without Cause"); or
v. the Employee terminates his employment hereunder for any
reason whatsoever (whether by reason of retirement,
resignation or otherwise).
b. Cause. The following actions, failures and events by or
affecting the Employee shall constitute "Cause" for
termination within the meaning of clause (iii) of Section 7
(a) above:
i. indictment for or conviction of the Employee of, or the
entering of a plea of nolo contendere by the Employee
with respect to, having committed a felony;
ii. abuse of controlled substances or alcohol or acts of
dishonesty or moral turpitude by the Employee that are
materially detrimental to one or more of the Companies;
iii. acts or omissions by the Employee that the Employee knew
were likely to damage the business of one or more of the
Companies;
iv. negligence by the Employee in the performance of, or
disregard by the Employee of his material obligations
under this Agreement or otherwise relating to his
employment, which negligence or disregard continue
unremedied for a period of fifteen (15) days after
written notice thereof to the Employee; or
v. failure by the Employee to obey the reasonable and
lawful orders and policies of the Board of Directors
that are consistent with the provisions of this
Agreement.
8. Payments Upon Termination.
a. Termination Without Cause. In the event that the Employee's
employment is terminated by the Company Without Cause during
the Employment Term and provided that the Employee is acting
in accordance with his obligations pursuant to Section 10,
then the Company shall pay to the Employee, as severance pay
or liquidated damages or both, monthly payments at the rate
per annum of his Salary at the time of such termination for a
period of twelve (12) months.
b. Payments Limited. Notwithstanding anything to the contrary
expressed or implied herein, except as required by applicable
law and except as set forth in Sections 4(b) and 8(a) above
and the Company's Employee
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Handbook, neither the Company nor any of its affiliates shall
be obligated to make any payments to the Employee or on his
behalf of whatever kind or nature by reason of the Employee's
cessation of employment (including, without limitation, by
reason of termination of the Employee's employment by the
Company for Cause or Without Cause, other than (i) such
amounts, if any, of his Salary and bonus as shall have accrued
and remained unpaid as of the date of said cessation and (ii)
subject to the terms of the Company's Employee Handbook, such
other amounts, if any, which may be then otherwise payable to
the Employee pursuant to the terms of the Company's benefits
plans or pursuant to clause (v) of Section 5(a) above.
c. Interest. No interest shall accrue on or be paid with respect
to any portion of any payments under this Section 8.
d. The obligations of the Company under this section 8 shall,
except as otherwise provided herein, survive the termination
of the Employment Term and the expiration or termination of
this Agreement.
9. Non-Assignability.
i. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee or his
beneficiaries or legal representatives without the
Company's prior written consent; provided, however, that
nothing in this Section 9(a) shall preclude the Employee
from designating a beneficiary to receive any benefit
payable hereunder upon his death or incapacity. This
Agreement may not be assigned by the Company except with
the Employee's prior written consent, provided, however,
that the Company may assign this Agreement without
Employee's consent to an affiliate of the Company with
the financial resources to fulfill the Company's
obligations hereunder and to an entity involved in a
Change of Control, as defined in Section 5(e) of this
Agreement.
ii. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or to assignment by
operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null,
void and of no effect.
10. Restrictive Covenants.
a. Competition. During the Employment Term and, in the event the
Employee's employment is terminated, during the period
following such termination and continuing until (i) the last
payment is made to the
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Employee pursuant to Section 8(a) hereof, as the case may be,
or (ii) in the case of a termination of the Employee's
employment pursuant to Section 7(a)(iii) or (v) hereof, the
first anniversary of the date of such termination (the
"Applicable Continuation Period"), the Employee will not
directly or indirectly (as a director, officer, executive
employee, manager, consultant, independent contractor, advisor
or otherwise) engage in competition with, or own any interest
in, perform any services for, participate in or be connected
with any business or organization which engages in competition
with any of the Companies within the meaning of Section 10(d),
provided, however, that the provisions of this Section 10(a)
shall not be deemed to prohibit the Employee's ownership of
not more than two percent (2%) of the total shares of all
classes of stock outstanding of any publicly held company, or
ownership, whether through direct or indirect stock holdings
or otherwise, of not more than one percent (1%) of any other
business.
b. Non-Solicitation. During the Employment Term and during the
Applicable Continuation Period, the Employee will not directly
or indirectly induce or attempt to induce any employee of any
of the Companies to leave the employ of the Company or such
subsidiary or affiliate, or in any way interfere with the
relationship between any of the Companies and any employee
thereof.
c. Non-Interference. During the Employment Term and during the
Applicable Continuation Period, the Employee will not directly
or indirectly hire, engage, send any work to, place orders
with, or in any manner be associated with any supplier,
contractor, subcontractor or other business relation of any of
the Companies if such action by him would have an adverse
effect on the business, assets or financial condition of any
of the Companies, or materially interfere with the
relationship between any such person or entity and any of the
Companies.
d. Certain Definitions.
i. For purposes of this Section 10, a person or entity
(including, without limitation, the Employee) shall be
deemed to be a competitor of one or more of the
Companies, or a person or entity (including, without
limitation, the Employee) shall be deemed to be engaging
in competition with one or more of the Companies, if
such person or entity conducts, or, to the knowledge of
the Employee, plans to conduct, the Specified Business
(as hereinafter defined) as a significant portion of its
business in any of the markets served by the Companies
or, in the case of a person or entity pursuing a
business strategy of providing telecommunications
infrastructure services anywhere in the continental
United States.
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ii. For purposes of this Agreement, "Specified Business"
means (A) providing outsourced telecommunications
infrastructure services to local or long distance
telecommunications providers or engaging in any business
conducted by the Company at the time of termination of
the Employee's employment with the Company or (B)
conducting, operating, carrying out or engaging in the
business of managing any entity described in clause (A).
iii. Certain Representations of the Employee. In connection
with the foregoing provisions of this Section 10, the
Employee represents that his experience, capabilities
and circumstances are such that such provisions will not
prevent him from earning a livelihood. The Employee
further agrees that the limitations set forth in this
Section 10 (including, without limitation, time and
territorial limitations) are reasonable and properly
required for the adequate protection of the current and
future businesses of the Companies. It is understood and
agreed that the covenants made by the Employee in this
Section 10 (and in Section 6 hereof) shall survive the
expiration or termination of this Agreement.
iv. Injunctive Relief. The Employee acknowledges and agrees
that a remedy at law for any breach or threatened breach
of the provisions of Section 10 hereof would be
inadequate and, therefore, agrees that the Company and
any of its subsidiaries or affiliates shall be entitled
to seek injunctive relief in addition to any other
available rights and remedies in cases of any such
breach or threatened breach; provided, however, that
nothing contained herein shall be construed as
prohibiting the Company or any of its affiliates from
pursuing any other rights and remedies available for any
such breach or threatened breach.
11. Representations and Warranties. The Employee represents and warrants
that he is not subject to or a party to any agreement, contract,
covenants, order or other restriction which in any way prohibits,
restricts or impairs the Employee's ability to enter into this
Agreement and carry out his duties and obligations hereunder. Each
party hereto represents and warrants to the other that (i) each has
the full legal right and power and all authority and approvals
required to enter into, execute and deliver this Agreement and to
perform fully all of his or its obligations hereunder; and (ii) this
Agreement has been duly executed and delivered and constitutes a
valid and binding obligation of each party, enforceable in
accordance with its terms.
12. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs,
successors, legal representatives and assigns.
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13. Notices. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and (i) delivered
personally, (ii) mailed by certified or registered mail, return
receipt requested and postage prepaid, (iii) sent via a nationally
recognized overnight courier or (iv) sent via facsimile confirmed in
writing to the recipient, if to the Company at the Company's
principal place of business, and if to the Employee, at his home
address most recently filed with the Company, or to such other
address or addresses as either party shall have designated in
writing to the other party hereto, provided, however, that any
notice sent by certified or registered mail shall be deemed
delivered on the date of delivery as evidenced by the return
receipt.
14. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. Severability. The Employee agrees that in the event that any court
of competent jurisdiction shall finally hold that any provision of
Section 6 or 10 hereof is void or constitutes an unreasonable
restriction against the Employee, the provisions of such Section 6
or 10 shall not be rendered void but shall apply with respect to
such extent as such court may judicially determine constitutes a
reasonable restriction under the circumstances. If any part of this
Agreement other than Section 6 or 10 is held by a court of competent
jurisdiction to be invalid, illegible or incapable of being enforced
in whole or in part by reason of any rule of law or public policy,
such part shall be deemed to be severed from the remainder of this
Agreement for the purpose only of the particular legal proceedings
in question and all other covenants and provisions of this Agreement
shall in every other respect continue in full force and effect and
no covenant or provision shall be deemed dependent upon any other
covenant or provision.
16. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver
of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more
times be deemed a waiver or relinquishment of such right or power at
any other time or times.
17. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with
respect to the subject matter hereof and supersedes all prior
agreements, oral and written, between the parties hereto with
respect to the subject matter hereof. This Agreement may be modified
or amended only by an instrument in writing signed by both parties
hereto.
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18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Employee have duly executed and
delivered this Agreement as of the day and year first above written.
LEXENT INC.
__________________________ DATE: September 23, 2002
BY: Xxxxx X'Xxxx
Its: Chief Executive Officer
XXXXXX XXXXXXXX
___________________________ DATE: September 23, 2002
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