EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 15th day of October, 1997, by
and among FiveCom, Inc., a Massachusetts corporation with its principal place of
business in Waltham, Massachusetts (hereinafter referred to as the "Company"),
MaineCom Services, a Maine corporation with its principal place of business in
Augusta, Maine (hereinafter referred to as "MaineCom"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of
Newton, Massachusetts (hereinafter referred to as the "Executive").
WHEREAS, the Company recognizes that the Executive is a valued employee
because of his knowledge of the Company's affairs and his experience and
leadership capabilities, and desires to encourage his continued employment with
the Company to assure itself of the continuing advantage of that knowledge,
experience and leadership for the benefit of customers and shareholders,
particularly during a period of transition in various aspects of the Company's
business and in the event of a Change of Control; and
WHEREAS, the Executive desires to serve in the employ of the Company on
a full-time basis for the period provided in this Employment Agreement
(hereinafter referred to as the "Agreement") on the terms and conditions
hereinafter set forth; and
WHEREAS, the Company and the Executive wish to set forth the terms and
conditions under which such employment will occur.
NOW, THEREFORE, in consideration of the continued offer of employment
by the Company and the continued acceptance of employment by the Executive, and
the
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mutual promises and covenants contained herein, the Company and the Executive
hereby agree as follows:
1. Term of Agreement.
a. Term. The term of this Agreement shall begin on October 15, 1997
(hereinafter referred to as the "Effective Date") and shall expire on October
14, 2000; provided, however, that on October 15, 2000 and each succeeding
October 15 thereafter, the term of this Agreement shall automatically extend one
year unless not later than the immediately preceding April 1 either the Company
or the Executive shall have given written notice that such party does not wish
to extend the term of the Agreement; and provided further, that if a Change of
Control occurs during the term of this Agreement or any extension thereof, this
Agreement shall be automatically extended and shall thereafter expire 36
calendar months after the date of said Change of Control.
b. Expiration. Notwithstanding anything to the contrary in this Section
1, except as to vested benefits, this Agreement and all obligations hereunder
shall terminate on the earliest to occur of (i) the date of the Executive's
death, (ii) thirty (30) days after the Company gives notice to the Executive
that the Company is terminating the Executive's employment for reason of Total
Disability or Cause; or (iii) the applicable term of the Agreement as specified
in Section 1.a above.
2. Definitions. The following terms shall have the meanings set forth
below:
"Affiliate" means a person that directly or indirectly through
one or more intermediaries controls, is controlled by, or is under common
control with, the Company.
"Board" means the Board of Directors of the Company.
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"Cause" means any of the following events or occurrences:
(i) Any act of material dishonesty taken by, or committed at the
direction of, the Executive.
(ii) Any illegal or unethical conduct which would impair the
Executive's ability to perform his duties under this Agreement
or would impair the business reputation of the Company.
(iii) Conviction of a felony.
(iv) The continued failure of the Executive to perform his
responsibilities and duties under this Agreement in a
satisfactory manner, after demand for performance has been
delivered in writing to the Executive specifying the manner in
which the Company believes that the Executive is not
performing.
"Change of Control" with respect to MaineCom, the Company, or FiveCom
LLC, a majority-owned affiliate of the Company, means the occurrence of any of
the following events:
(i) Any corporation, partnership, limited liability company or any
other form of entity, whether business or governmental, or any
person (other than Central Maine Power Company or any
Affiliate or any trustee or other fiduciary holding securities
under an employee benefit plan of Central Maine Power Company
or any Affiliate), is or becomes the beneficial owner, as
described in Rule 13d-3 under the Securities Exchange Act of
1934, as amended, directly or indirectly, of stock of
MaineCom, the
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Company or FiveCom LLC, as applicable, representing fifty
percent (50%) or more of the combined voting power of the then
outstanding stock eligible to vote of MaineCom, the Company or
FiveCom LLC, as applicable.
(ii) The stockholders of MaineCom, the Company or FiveCom LLC, as
applicable, approve a merger, sale of interest or
consolidation of MaineCom, the Company or FiveCom LLC, as
applicable, with or to any other entity or person, other
than a sale of interest, merger or consolidation which would
result in the voting stock of MaineCom, the Company or
FiveCom LLC, as applicable, outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the
combined voting power of the outstanding voting stock of
MaineCom, the Company or FiveCom LLC, as applicable, or such
surviving entity immediately after such sale of interest,
merger or consolidation provided, that a merger or
consolidation effected to implement a recapitalization (or
similar transaction) in which no entity or person (as
hereinabove defined) acquires more than fifty percent (50%)
of the combined voting power of the outstanding voting stock
of MaineCom, the Company or FiveCom LLC, as applicable,
shall not constitute a Change of Control thereof.
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(iii) The stockholders of MaineCom, the Company or FiveCom LLC, as
applicable, approve a plan of complete liquidation of
MaineCom, the Company or FiveCom LLC, as applicable, or an
agreement for the sale, lease, exchange or other disposition
of all or substantially all of its assets (or any transaction
having a similar effect).
"Constructive Discharge" means, so long as no Change of Control has
occurred, any reduction in the Executive's annual base salary in effect as of
the Effective Date of this Agreement, and also means, on or after a Change of
Control:
(i) any reduction in the Executive's annual base salary in effect
as of the Effective Date of this Agreement, or as the same may
be increased from time to time;
(ii) a substantial reduction in the nature or scope of the
Executive's responsibilities, duties or authority from those
described in Section 3.c of this Agreement;
(iii) a material adverse change in the Executive's title or
position; or
(iv) relocation of the Executive's place of employment from the
Company's principal executive offices to a place more than
twenty-five (25) miles from Waltham, Massachusetts with the
Executive's consent.
"Severance Benefits" means the benefits set forth in Section 5.a or 5.c
of this Agreement.
"Total Disability" means the complete and permanent inability of the
Executive to perform all of his duties under this Agreement on a full-time basis
for a period of at
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least six (6) consecutive months, as determined upon the basis of such evidence,
which may include independent medical reports and data.
3. Employment.
a. Position. The Company hereby agrees to continue its employment of
the Executive in the capacity of President, and the Executive hereby agrees to
remain in the employ of the Company for the period beginning on the Effective
Date and ending on the date on which the Executive's employment is terminated in
accordance with this Agreement (the "Employment Period"). This Agreement shall
not restrict in any way the right of the Company to terminate the Executive's
employment at whatever time and for whatever reason it deems appropriate, nor
shall it limit the right of the Executive to terminate employment at any time
for whatever reason he deems appropriate.
b. Performance. The Executive agrees that during the Employment Period
he shall devote substantially all his business attention and time to the
business and affairs of the Company, and use his best efforts to perform
faithfully and efficiently the duties and responsibilities of the Executive
under this Agreement. It is expressly understood that (i) the Executive may
devote a reasonable amount of time to such industry associations and charitable
and civic endeavors as shall not materially interfere with the services that the
Executive is required to render under this Agreement, and (ii) the Executive may
service as a member of one or more boards of directors of companies that are not
affiliated with the Company and do not compete with the Company or any of its
Affiliates so long as such membership does not materially interfere with the
Executive's duties hereunder.
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c. Job Duties. The following listing of job duties shall represent the
Executive's primary responsibilities. Such responsibilities may be expanded and,
so long as no Change of Control has occurred, may be decreased as the business
needs of the Company require. The Executive's primary job responsibilities shall
include but not be limited to, development of the Company's business including
but not limited to opening new markets, public image, sales, marketing and
customer relations. The Executive's duties do not include the duties of Chief
Executive Officer of the Company.
4. Compensation and Benefits.
a. During the Employment Period, the Executive shall be
compensated as follows:
(i) Salary. The Executive shall receive an annual base salary, the
amount of which shall be reviewed regularly and determined
from time to time, but which shall not be less than
$150,000.00. His salary shall be payable in accordance with
Company payroll practices.
(ii) Participation in Executive Plans. He shall be entitled to
participate in any and all plans and programs maintained by
the Company from time to time to provide benefits for its
executives, including without limitation any short-term or
long-term incentive plan or program, in accordance with the
terms and conditions of any such plan or program or the
administrative guidelines relating thereto, as may be amended
from time to time; provided, however, that nothing contained
in this part (ii) shall limit the
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authority and discretion of the Board to make the
determinations and decisions required or permitted by any such
plan or program.
(iii) Participation in Salaried Employee Plans. The Executive shall
be entitled to participate in any and all plans and programs
maintained by the Company from time to time to provide
benefits for its salaried employees generally, including
without limitation any savings and investment, stock
purchase or group medical, dental, life, accident or
disability insurance plan or program, subject to all
eligibility requirements of general applicability, to the
extent that executives are not excluded from participation
therein under the terms thereof or under the terms of any
executive plan or program or any approval or adoption
thereof; provided, however, that during the term of this
Agreement, medical insurance coverage in an amount no less
than that provided as of the Effective Date hereof shall be
provided to the Executive.
(iv) Other Fringe Benefits. The Executive shall be entitled to all
fringe benefits generally provided by the Company at any
time to its full-time salaried employees, including without
limitation three weeks annual paid vacation, holidays and
sick leave but excluding severance pay, in accordance with
generally applicable Company policies with respect to such
benefits. The Executive shall be entitled to the use of a
Company vehicle on substantially the same in terms and
conditions as are in effect on the Effective Date of this
Agreement.
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(v) In recognition of the Executive's ownership of shares of the
common stock of the Company and shares of a membership
interest in FiveCom LLC, MaineCom agrees that if warrants
for the purchase of 5,875 shares of a membership interest
issue or to be issued by FiveCom LLC to Central Maine Power
Company, a Maine corporation which holds 100 percent of the
common stock of MaineCom, are exercised, and if the
Executive does not voluntarily terminate employment with the
Company prior to October 14, 2000, MaineCom shall, at the
time of such exercise, transfer to the Executive such number
of shares of the Company's Series A Preferred Stock as shall
return his beneficial interest in FiveCom LLC to the level
that existed immediately prior to such exercise, excluding
any other issuances of equity or equity rights by FiveCom
LLC at any time on or after the Executive Date of this
Agreement. If the Executive acquires any additional equity
interest or equity rights in the Company or FiveCom LLC on
or after the Effective Date hereof, such additional interest
or rights shall not be protected or otherwise taken into
account under the foregoing provision.
b. Withholding. All compensation payable under this Section 4 shall be
subject to normal payroll deductions for withholding income taxes, social
security taxes and the like.
5. Severance Benefits.
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a. Change of Control. If, on or after a Change of Control, the
Executive's employment with the Company is terminated during the Employment
Period by the Company and/or any successor for any reason other than death,
Total Disability or Cause, or by the Executive within twelve (12) calendar
months of a Constructive Discharge, Severance Benefits shall be provided as
follows:
(i) The Company and MaineCom shall pay the Executive, in one lump
sum cash payment, within sixty (60) days following the date of
termination of employment as defined in Section 6 below, an
amount equal to 2.99 times the Executive's then-current base
salary.
(ii) The Company and MaineCom shall provide the Executive with
so-called COBRA medical continuation coverage paid by the
Company for a period up to eighteen (18) months, or until the
Executive obtains coverage under another group medical plan
with another employer, whichever occurs first.
(iii) The Company and MaineCom shall pay a fee to an independent
outplacement firm selected by the Executive for outplacement
services in an amount equal to the actual fee for such
services up to a total of $10,000.
(iv) The obligations of the Company and MaineCom under parts (i),
(ii) and (iii) of this Section 5.a shall be joint and several.
b. Parachute Provision. Notwithstanding the provisions of
Section 5.a hereof, if, in the opinion of tax counsel selected by the Company's
independent auditors,
(i) the Severance Benefits set forth in said Section 5.a and any
payments or benefits otherwise payable to the Executive would
constitute "parachute
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payments" within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code") (said
Severance Benefits and other payments or benefits being
hereinafter collectively referred to as "Total Payments"), and
(ii) the aggregate present value of the Total Payments would exceed
2.99 times the Executive's base amount, as defined in Section
280G(b)(3) of the Code,
then, such portion of the Severance Benefits described in Section 5.a hereof as,
in the opinion of said tax counsel, constitute "parachute payments" shall be
reduced as directed by tax counsel so that the aggregate present value of the
Total Payments is equal to 2.99 times the Executive's base amount. The tax
counsel selected pursuant to this Section 5.b may consult with tax counsel for
the Executive, but shall have complete, sole and final discretion to determine
which Severance Benefits shall be reduced and the amounts of the required
reductions. For purposes of this Section 5.b, the Executive's base amount and
the value of the Total Payments shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected thereby.
c. No Change of Control. If no Change of Control has occurred, and the
Executive's employment with the Company is terminated during the Employment
Period either (i) by the Company for any reason other than death, Total
Disability or Cause, or (ii) by the Executive within six (6) calendar months of
a Constructive Discharge, the Company shall pay the Executive, in one lump sum
payment within sixty (60) days following the date of termination of employment
as defined in Section 6 below, an
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amount equal to one (1) times the Executive's annual base salary in effect on
the date immediately preceding the date of termination, or preceding the date of
a Constructive Discharge attributable to a base salary reduction if applicable.
6. Date of Termination. For purposes of this Agreement, the date of
termination of the Executive's employment shall be the date notice is given to
the Executive by the Company and/or any successor or, in the case of a
Constructive Discharge, the date set forth in a written notice given to the
Company or any successor by the Executive, provided that the Executive gives
such notice within twelve (12) calendar months of the Constructive Discharge in
the case of a Change of Control, and within six (6) calendar months of the
Constructive Discharge in other cases, and specifies therein the event
constituting the Constructive Discharge.
7. Taxes.
▇. ▇▇▇▇▇-Up Amount. In the event that any portion of the Severance
Benefits provided in Section 5 is subject to tax under Code ss.4999, or any
successor provision thereto (the "Excise Tax"), the Company shall pay to the
Executive an additional amount (the "Gross-Up Amount") which, after payment of
all federal and State income taxes thereon (assuming the Executive is at the
highest marginal federal and applicable State income tax rate in effect on the
date of payment of the Gross-Up Amount) and payment of any Excise Tax on the
Gross-Up Amount, is equal to the Excise Tax payable by the Executive on such
portion of the Severance Benefits. Any Gross-Up Amount payable hereunder shall
be paid by the Company coincident with the payment of the Severance Benefits
described in Section 5.a of this Agreement.
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b. Tax Withholding. All amounts payable to the Executive under this
Agreement shall be subject to applicable withholding of income, wage and other
taxes.
8. Non-Competition, Confidentiality and Cooperation.
a. The Executive agrees that:
(i) During the Employment Period and for one (1) year after the
termination of the Executive's employment with the Company
for any reason other than a Change of Control, the Executive
shall not serve as a director, officer, employee, partner or
consultant or in any other capacity in any business that is
a competitor of the Company, or solicit Company employees
for employment or other participation in any such business,
or take any other action intended to advance the interests
of such business; provided, however, that this Section
8.a(i) shall not apply after the termination of the
Executive's employment if the Executive voluntarily
terminates employment and is not eligible to receive a
Severance Benefit under Section 5.c above.
(ii) During and after the Executive's employment with the Company,
he shall not divulge or appropriate to his own use or the use
of others any secret, proprietary or confidential information
or knowledge pertaining to the business of the Company, or any
of its Affiliates, obtained during his employment with the
Company.
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(iii) During the Employment Period, he shall support the Company's
interests and efforts in all regulatory, administrative,
judicial or other proceedings affecting the Company and,
after the termination of his employment with the Company, he
shall use best efforts to comply with all reasonable
requests of the Company that he cooperate with the Company,
whether by giving testimony or otherwise, in regulatory,
administrative, judicial or other proceedings affecting the
Company except any proceeding in which he may be in a
position adverse to that of the Company. After the
termination of employment, the Company shall reimburse the
Executive for his reasonable expenses and his time, at a
reasonable rate to be determined, for the Executive's
cooperation with the Company in any such proceeding.
(iv) The term "Company" as used in this Section 8 shall include
FiveCom, Inc., any Affiliate of FiveCom, Inc. (determined as
of the date of termination), any successor to the business or
operations of FiveCom, Inc., and any business entity spun-off,
divested, or distributed to shareholders which shall continue
the operations of FiveCom, Inc.
The provisions of this Section 8 shall survive the expiration or termination of
this Agreement. The Executive agrees that the Company shall be entitled to
injunctive relief to prevent any breach or threatened breach of these
provisions. In the event of a failure to comply with part (i), (ii) or (iii) of
this Section 8, the Executive agrees that the
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Company shall have no further obligations to pay the Executive any Severance
Benefits under Section 5.c. of this Agreement.
9. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment.
10. Assignment. This Agreement and the rights and obligations of the
Company hereunder shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, including without limitation any
corporation or other entity acquiring all or substantially all of the business
or assets of the Company whether by operation of law or otherwise. This
Agreement and the rights of the Executive hereunder shall not be assignable by
the Executive, and any assignment by the Executive shall be null and void.
11. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Augusta, Maine, in accordance with the rules of the American Arbitration
Association then in effect. The pendency of any such dispute or controversy
shall not affect any rights or obligations under this Agreement. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
12. Waiver; Amendment. The failure of either party to enforce, or any
delay in enforcing, any rights under this Agreement shall not be deemed to be a
waiver of such rights, unless such waiver is an express written waiver which has
been signed by the waiving party. Waiver of any one breach shall not be deemed
to be a waiver of any other breach of the same or any other provision hereof.
This Agreement can be
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amended only by written instrument signed by each party hereto and no course of
dealing or practice or failure to enforce or delay in enforcing any rights
hereunder may be claimed to have effected an amendment of this Agreement.
13. Singular Contract. This Agreement is a singular agreement between
the Executive and the Company, and is not part of a general "plan" or "program"
for employees as a group. This Agreement shall, under no circumstances, be
deemed to be an "employee welfare benefit plan" or an "employee pension benefit
plan" as defined in the Employee Retirement Income Security Act of 1974
(hereinafter referred to as "ERISA"). Notwithstanding, the Company may submit a
letter to the Department of Labor indicating the possible establishment of a
so-called unfunded "top hat" plan for the benefit of a select group of
management and highly compensated employees to avoid the costs and uncertainties
which may occur in the event of a Department of Labor audit and challenge
relative to compliance with any allegedly applicable provisions of ERISA. The
Executive specifically acknowledges and agrees that the filing of the so-called
"top hat" letter notice by the Company shall not be construed or interpreted as
an admission on the part of the Company that this Agreement constitutes an ERISA
plan, and the Company hereby categorically states, and the Executive hereby
agrees, that this Agreement is an ad hoc individual contract with the Executive.
14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by first-class, registered
or certified mail or hand-delivered to the Executive at the last residence
address he has provided
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to the Company or, in the case of the Company, at its principal executive
offices to the attention of the Corporate Secretary.
15. Titles and Captions. The section and paragraph titles and captions
contained herein are for convenience only and shall not be held to explain,
modify, amplify, or aid in the interpretation, construction or meaning of the
provisions of this Agreement.
16. Miscellaneous. This Agreement shall be construed and enforced in
accordance with the laws of the State of Maine. In the event that any provisions
of this Agreement shall be held to be invalid, the other provisions hereof shall
remain in full force and effect.
17. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous oral or written agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Effective Date written above.
WITNESS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------- --------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
WITNESS: FIVECOM, INC.
/s/ ▇▇▇ ▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- -----------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman of the Board
and Chief Executive Officer
WITNESS: MAINECOM SERVICES
/s/ ▇▇▇ ▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------- -----------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
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