EXHIBIT 10.22
AGREEMENT
AGREEMENT (the "Agreement"), entered into on this 31st day of July 1998,
between Prodigy Services Corporation, a Delaware Corporation (the "Company"),
and an indirect wholly owned subsidiary of Prodigy, Inc. (the "Parent"), with
its principal place of business at 44 So. Broadway, and Xxxxxxx X. Pillar,
residing at 000 Xxxx 00xx Xxxxxx, #00-X, Xxx Xxxx, X.X. (the "Executive").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of September 29, 1997 (the "Employment Agreement");
WHEREAS, on September 29, 1997, the Executive was granted an option
pursuant to the Prodigy, Inc., Stock Option Plan to purchase 625,000 shares of
Common Stock of the Company at an exercise price of $3.00 per share;
WHEREAS, the Executive is currently serving as President and Chief
Executive Officer and a director of the Company;
NOW, THEREFORE, in consideration of the undertakings and commitments
contained herein and other good and valuable consideration, the sufficiency of
which is acknowledged, the parties agree as follows:
1. Resignation. Effective as of July 31, 1998 (the "Commencement Date")
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and except as provided in Sections 2 and 3 below, the Executive hereby
resigns as President and Chief Executive Officer of the Company and from
all other positions held with the Company and the Company's current
subsidiaries (individually and collectively, the "Prodigy Entities"),
including without limitation as a Trustee of The Prodigy Trust. The Company
hereby accepts such resignations.
2. Service as a Director. The Executive shall continue to serve as a
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director of the Company and agrees to serve as a director until his death,
resignation or removal in accordance with applicable law and the respective
Certificates of Incorporation and by-laws of the Company. The Executive
shall not be eligible to participate in any compensation arrangements put
in place for outside directors so long as Consulting Period is in effect
other than to be covered under the Company's standard directors liability
insurance policy and to have reasonable expenses reallocated.
3. Consulting Agreement. The Company desires to enter into a Consulting
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Agreement (the "Agreement"), effective as of the 1st day of August 1998,
with Xxxxxxx X. Pillar, presently residing at 000 Xxxx 00xx Xxxxxx, #00-X,
Xxx Xxxx, X.X. (the "Consultant").
3.1 Agreement. The Company desires to retain the Consultant, and the
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Consultant desires to be retained by the Company, as a consultant with
respect to the matters described herein. In consideration of the
mutual covenants and promises contained herein, and other good and
valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties
hereto, the parties agree as follows:
3.2. Term of Engagement. The Company hereby agrees to retain the
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Consultant, and the Consultant hereby agrees to be retained by the
Company, upon the terms set forth in this Agreement, for the period
commencing on August 1, 1998, and ending on July 31, 1999 (the
"Consulting Period"). The Agreement will be non-cancelable by the
Company and will renew year-to-year unless either party terminates
with 30 days advance notice prior the end of the then current year.
3.3. Title; Capacity. The parties agree that the Consultant shall
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serve as Vice Chairman (a non-executive Board of Directors position),
and will have responsibility for continuing to support the Chairman in
setting corporate strategy, building and maintaining senior level
relationships throughout the industry; speaking on behalf of the
Corporation in public venues when appropriate; and continuing to help
guide the Company to and through an initial public offering.
3.4. Time Commitment. During the term, Consultant will be available
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from time-to-time on reasonable notice to consult with the Chairman,
but in no case will Consultant be required to dedicate such time as
would interfere with Consultant's ability to enter into full-time
employment elsewhere or more than ten hours per month on a non-
cumulative basis.
4. Fees and Expenses.
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4.1 Fees. In full compensation for services rendered under this
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Agreement, the Company shall pay the Consultant a fee of $250,000,
payable in twelve (12) equal monthly installments, in advance on the
first day of each month during the Consulting Period, with an initial
payment of $20,833.33 payable upon execution of this Agreement.
4.2 Performance Bonus. A performance bonus of $125,000 based on a
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successful initial public offering, payable in full 30 days after the
IPO; otherwise discretionary based on performance and payable in
February, 1999.
4.3 Expenses. The Company shall reimburse the Consultant for all
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reasonable travel and other business expenses incurred or paid by the
Consultant in connection with the performance of his duties hereunder,
upon presentation by the Consultant of documentation, expense
statements, vouchers and/or such other supporting information as the
Company may reasonably request, provided, however, that the nature and
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amount of such expenses shall be subject to the Company's expense
policies as in effect from time to time.
4.4 Independent Contractor Status. The Consultant shall perform all
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services under this Agreement as an "independent contractor" and not
as an employee or agent of the Company. The Consultant is not
authorized to assume or create any obligation or responsibility
express or implied, on behalf of, or in the name of, the Company or to
bind the Company in any manner. The Consultant shall not be entitled
to any benefits, coverages or privileges, including without limitation
social security, unemployment, pension payments, made available to
employees of the Company with respect to his services as a consultant.
The Company shall not make any tax withholding with respect to the
fees paid hereunder, and the Consultant shall be solely responsible
for all income or other taxes attributable thereto. The parties agree,
however, that the Executive's termination of employment on July 31,
1998, shall constitute a qualifying event pursuant to the Consolidated
Budget Reconciliation Act of 1985 (COBRA), and the Company shall
afford the Consultant benefit continuation to the extent required by
law at the Company's expense.
4.5 Relocation. If the Consultant chooses to relocate out of the New
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York City area any time during the term of this Agreement, the Company
will pay all reasonable actual expenses incurred to relocate the
Consultant, his family, automobile, and household goods to another
city in the United States. In addition, the Company will pay any
continuation of rent on the Consultant's apartment in New York City if
the Consultant is unable to break the current lease without any
payment, as well as applicable lease cancellation penalties.
4.6 Administrative Support. The Consultant will continue to be
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provided with his current office and full time assistant, Xxxxxx
Xxxxxx, during the term of the consulting period. The Consultant will
also be provided with a complimentary Prodigy Internet account for as
long as he is a member of the Board of Directors.
4.7 Company match of 401(k). The Company hereby waives existing
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vesting restrictions on the Consultant's vesting schedule of the
Company match of the Consultant's 401(k), and vests those amounts
immediately upon signing of this Agreement.
5. Options.
a.) On September 29, 1997, the Parent granted the Executive a stock
option to purchase 625,000 shares of common stock of the Parent at an
exercise price of $3.00 per share. Such options vest as follows:
- 100,000 vested as of September 29, 1997;
- 175,000 options shall vest on September 29, 1998;
- 175,000 options shall vest on September 29, 1999;
- 175,000 options shall vest on September 29, 2000 provided, however,
that 75,000 of the shares which would otherwise vest on September 29,
2000 (the "Performance Options"), shall vest upon the closing of an
initial public offering by the Company by August 1, 1999. The parties
agree that the vesting schedule specified in this Section 5 shall
remain in effect and the options will continue to vest in the event
that the Consulting Agreement is not renewed beyond July 31, 1999.
Further, the Consultant may exercise a portion of or all his vested
options for up to a period of 12 months after ceasing to be
a member of the Board of Directors or a Consultant or 12 months from the
final vesting date, if later, except that the Consultant shall have up
until December 31, 2000 to exercise any or all shares under option
except for those which vest on September 29, 2000, for which the
Consultant shall have until September 28, 2001 to exercise. The parties
acknowledge that the exercise price of all stock options referred to in
this Section 5 has been reduced to $1.00 per share.
b.) The Consultant, if requested by the Parent and the managing
underwriter of the initial public offering of the Parent's securities
(the "IPO"), agrees not to sell publicly or otherwise transfer or
dispose of any securities of the Parent held by the Consultant for a
specified period of time (not to exceed 180 days) following the
effective date of the registration statement for the IPO; provided that
all then executive officers, directors and holders of 5% or more of the
outstanding stock of the Parent enter into similar agreements. The
Consultant acknowledges that no representations have been made to him
concerning the size, valuation or timing of any IPO.
c.) All options and any additional shares owned by the Consultant will
be registered by the Company (under an S-8 or other appropriate filing),
at the time of the IPO filing.
d.) Acceleration of Vesting Schedule. If there is a change of control of
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the Parent, pursuant to which one single person or entity has control of
the Parent (as control is understood under the Internal Revenue Code or
securities laws of the US), the vesting schedule on all options
previously granted to the Consultant will be accelerated so that a total
of 50% of the Consultant's unvested options selected from those options
last scheduled to vest will be vested on the effective date of such
merger or acquisition. The vesting schedule shall thereafter remain the
same so that the remaining shares vest without giving effect to the
shares, which vested on an accelerated basis.
6. No Other Payments or Benefits. The parties acknowledge and agree that
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the payments, benefits and options described in Sections 4 and 5 above
represent the sole and entire amounts or compensation due or to become due
to the Consultant in connection with his services, his status and/or any
and all other associations with the Prodigy Entities (including, without
limitation, any termination of any of the forgoing or for any other reason
whatsoever), and no further or other compensation including, without
limitation, stock or other equity compensation, payments, bonuses,
benefits, unused accrued vacation time, any and all other accrued but
unpaid compensation, severance pay or other amounts whatsoever are or shall
become due or payable at any time by the Prodigy Entities (or by any
officer, director, employee or stockholder of the Prodigy Entities) to the
Consultant other than customary expense reimbursements.
7. Proprietary Information and Developments.
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7.1 Proprietary Information.
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(a) The Consultant agrees that all information and know-how,
whether or not in writing, of a private, secret or confidential
nature concerning the Company's business or financial affairs,
other than that which the Consultant learns and uses under the
auspices of Xxxxxxxx Xxxx or a Xxxxxxxx Xxxx portfolio company
(collectively "Proprietary Information") is and shall be the
exclusive property of the Company. By way of illustration, but not
limitation, Proprietary Information may include inventions,
products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, and
customer and supplier lists. The Consultant will not disclose any
Proprietary Information to others outside the Company or use the
same for any unauthorized purposes without written approval by the
Chairman of the Parent, unless and until such Proprietary
Information has become public knowledge without fault by the
Consultant.
(b) The Consultant agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks,
program listings, or other written, photographic, or other tangible
material containing Proprietary Information, whether created by the
Consultant or others, which shall come into his custody or
possession, shall be and are the exclusive property of the Company
to be used by the Consultant only in the performance of his
services for the Company.
(c) The Consultant agrees that his obligation not to disclose or
use information, know-how and records of the types set forth in
paragraphs (a) and (b) above, also extends to such types of
information, know-how, records and tangible property of customers
of the Company or suppliers to the Company or other third parties
who may have disclosed or entrusted the same to the Company or to
the Consultant in the course of the Company's business.
7.2 Developments.
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(a) The Consultant will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods,
developments, software, and works of authorship, whether patentable
or not, which are created, made, conceived or reduced to practice
by the Consultant or under his direction or jointly with others
during his employment by the Company, whether or not during normal
working hours or on the premises of the Company other than that
which the Consultant created under the auspices of Xxxxxxxx Xxxx or
a Xxxxxxxx Xxxx portfolio company (all of which are collectively
referred to in this Agreement as "Developments").
(b) The Consultant agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company), all
his right, title and interest in and to all Developments and all
related patents, patent applications, copyrights and copyright
applications.
(c) The Consultant agrees to cooperate fully with the Company, with
respect to the procurement, maintenance and enforcement of
copyrights and patents (both in the United States and foreign
countries), relating to
Developments at no cost to the Company. Consultant shall sign all
papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments,
assignment of priority rights, and powers of attorney, which the
Company may deem necessary or desirable in order to protect its
rights and interests in any Development.
7.3 Other Agreements. The Consultant hereby represents that his
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performance of all the terms of this Agreement and as a consultant to
the Company does not and will not breach the terms of any agreement
with any previous employer or other party to refrain from using or
disclosing any trade secret, confidential or proprietary information,
knowledge or data acquired by him in confidence or in trust prior to
the consulting period or to refrain from competing, directly or
indirectly, with the business of such previous employer or any other
party.
7.4 Entities Covered. All references in this Section 7 to the
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"Company" shall include all Prodigy Entities.
7.5 Effective Date. The parties intend and agree that the provisions
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of this Section 7 are intended to be, and shall be, effective as of
September 29, 1997 (the date on which the Executive commenced
employment with the Company).
8. Releases.
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8.1 By the Consultant.
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(a) In exchange for the payments and undertakings described within
this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Consultant, on behalf of himself and his representatives, agents,
estate, heirs, successors and assigns, hereby absolutely and
unconditionally releases and forever discharges the Prodigy
Entities and/or their respective successors, assigns, stockholders,
officers, directors, investors, employees, attorneys,
representatives and agents, both individually and in their official
capacities, from any and all actions or causes of action, suits,
claims, complaints, contracts, liabilities, agreements, promises,
debts, judgments, damages and demands of every kind or nature
whether existing or contingent, known or unknown, both in law and
equity, including without imitation: claims arising from or as a
consequence of any actions or inactions of the directors or
officers of the Prodigy Entities; any other contract, express or
implied; and common law.
(b) This release is intended by the Consultant to be all
encompassing and to act as a full and total release of any claims
that the Consultant has, may have or has had against the Prodigy
Entities and their respective successors, assigns, directors,
stockholders, officers, investors, employees, attorneys,
representatives and/or agents, both individually and in their
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official capacity with the Prodigy Entities, since the beginning of
the world through the date of this Agreement, specifically
including, but without limitation to: any federal or state law or
regulation dealing with either employment or employment
discrimination; the Age Discrimination in Employment Act; the fair
employment practices statute of any applicable jurisdiction; all
claims arising from or in conjunction with the Consultant's
employment and/or status as an officer of the Prodigy Entities; and
all claims for compensation (such as: severance payments; benefits;
accrued vacation pay; sick pay; reimbursable expenses; expense
vouchers; obligations or commitments to grant stock options or to
issue stock and all other rights to acquire stock, if any such
obligations, commitments and/or rights are claimed to exist;
performance or other bonuses; business-related expenses; and all
other payments, commissions, compensations or reimbursements of
every kind and description) other than the compensation expressly
provided for in this Agreement.
(c) The Consultant specifically waives any right he has or may have
under applicable law to revoke this Agreement after its execution.
The Consultant acknowledges that he was advised by the Company of
his right to obtain independent legal advice regarding this
agreement; that he has had the opportunity to review and reflect on
all the terms of this Agreement; and that he has not been subject
to any undue or improper influence interfering with the exercise of
his free will to execute this Agreement.
8.2 By the Prodigy Entities. In exchange for the releases set forth
above and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledge, the Company, on behalf of
itself, the Prodigy Entities and their respective successors, assigns,
directors, officers, employees, representatives and agents, hereby
absolutely and unconditionally releases and forever discharges the
Consultant, his representatives, agents, estate, heirs, successors and
assigns, from any and all actions or causes of action, suits, claims,
complaints, contracts, liabilities, agreements, promises, debts,
judgments, damages and demands of every kind or nature whether
existing or contingent, known or unknown, both in law and equity,
including without limitation: claims arising from or as a consequence
of the Consultant's acts or omissions as an officer or as a director
of the Company; any other contract, express or implied; and common
law. This release is intended by the Prodigy Entities to be all
encompassing and to act as a full and total release of any claims that
any Prodigy Entities has, may have or has had against the Consultant
or his representatives, agents, estate, heirs, successors and assigns,
since the beginning of the world through the date of this Agreement.
8.3 Exceptions. The foregoing release shall not apply to any act or
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omissions of either party occurring after the date hereof relating to
any breach of this Agreement and the Employment Agreement of September
29, 1997 is terminated effective July 31, 1998.
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8.4 No Admissions. Nothing in this Agreement is to be construed as
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an admission or acknowledgment by the Prodigy Entities and/or their
respective stockholders, officers, directors, investors, employees,
representatives or agents, of any unlawful, wrongful or negligent
conduct or as an admission or acknowledgment of any liability
whatsoever. Nothing in this Agreement is to be construed as an
admission or acknowledgment by the Consultant of any unlawful,
wrongful or negligent conduct or as an admission or acknowledgment of
any liability whatsoever.
8.5 Continuing Rights to Indemnification. It is expressly agreed and
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understood that nothing in this Agreement shall affect the parties'
rights and obligations relating to indemnification pursuant to the
Certificate of Incorporation of the Company, bylaws, Employment
Agreement, or law.
9. Confidentiality. The parties agree that the terms and contents of
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this Agreement, the contents of the negotiations and discussions resulting
in this Agreement, shall be maintained as confidential by the parties,
their agents and representatives, and none of the above shall be disclosed
except by either party for the purpose of enforcing this Agreement, to the
extent required by federal or state law, to the extent otherwise provided
for in this Agreement, or as agreed to in writing by the authorized agents
of each party.
10. Notices and Payments. All notices, payments and communications shall
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be given or made to the parties by hand delivery or first class prepaid
mail at the following addresses, or such other addresses as the parties
shall inform each other of in writing as aforesaid:
If to the Consultant: Xxxxxxx X. Pillar
000 Xxxx 00xx Xxxxxx, #00-X
Xxx Xxxx, XX 00000
If to the Company: Prodigy, Inc.
00 Xx. Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: General Counsel
11. No Other Inducement. In entering into this Agreement, neither party
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has relied on any representation, promise or inducement made by the other
party, except as expressly provided herein.
12. Entire Agreement. This Agreement constitutes the sole and entire
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agreement between the parties as to its subject matter and supersedes and
terminates any and all other agreements, understandings and representations
as to its subject matter, and the parties acknowledge and agree that there
are no other agreements, understandings and/or representations of any kind
whatsoever remaining between them except as set forth herein.
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13. Miscellaneous.
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13.1 The descriptive section headings herein have been inserted for
convenience only and shall not be deemed to limit or otherwise affect
the construction of any provision hereof. There shall be no
presumption that ambiguities, if any, in this Agreement shall be
construed for or against either party.
13.2 This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of New York, without reference
to conflict of laws principles.
13.3 This Agreement shall not be assignable by the Consultant or by
the Company but, except to the foregoing extent, shall be binding on
the parties hereto and their respective heirs, legal representatives,
successors and assigns and shall inure to the benefit of the Company's
successors and assigns. This Agreement may be modified or amended and
any provision hereunder waiver only by written agreement signed by the
parties.
13.4 The parties agree that each provision herein shall be treated as
a separate and independent clause, and the unenforceability of any one
clause shall in no way impair the enforceability of any of the other
clauses herein. Moreover, if one or more of the provisions contained
in this Agreement shall for any reason be held to be excessively broad
as to scope, activity or subject matter so as to be unenforceable at
law, such provision or provisions shall be construed by limited and
reducing it or them, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
13.5 This Agreement may be executed in any number of counterparts,
each of which shall constitute an original, but which taken together
shall constitute one instrument.
IN WITNESS WHEREOF, this Agreement is entered into under seal by the
Company and the Consultant as of the date set forth above.
/s/ Xxxxxxx Pillar
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Xxxxxxx X. Pillar
PRODIGY SERVICES CORPORATION
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Chairman
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AMENDMENT NO. 1
TO
AGREEMENT
THIS AMENDMENT NO. 1, (the "Amendment") dated this 5th day of January,
1999, to the Agreement dated as of August 1, 1998 (the "Agreement") between
Prodigy Communications Corporation (the "Company") with its principal place of
business at 00 Xxxxx Xxxxxxxx, Xxxxx Xxxxxx, Xxx Xxxx and Xxxxxxx X. Pillar,
residing at 000 Xxxx 00xx Xxxxxx, #00, Xxx Xxxx, Xxx Xxxx (the "Consultant").
Whereas, the Company and the Executive are parties to the Agreement,
pursuant to which Executive agreed to perform certain consulting services for
the Company and to serve as Vice Chairman of its Board of Directors; and
Whereas, the parties desire to amend the Agreement as provided herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree, and the
Agreement is hereby amended, as follows:
1. Termination of Consulting Services. The parties agree that effective
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as of the date hereof, the Consultant shall no longer provide
consulting services for the Company, and the provisions specified in
Article 3 of the Agreement shall be of no further force or effect.
2. Service As Director. Notwithstanding termination of the consulting
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services, Consultant hereby resigns his position as Vice Chairman of
the Company, but agrees to continue to serve as a director of the
Company until resignation or removal in accordance with applicable
law and the Certificate of Incorporation and bylaws of the Company.
In consideration of the compensation arrangements described herein,
Consultant agrees that he shall not be eligible for additional
compensation as a director until such time as the Company adopts
compensation arrangements for outside directors (at which time he
will participate in such compensation arrangements), except that
Consultant shall be entitled to reimbursement for reasonable out of
pocket travel expenses relating to attendance at Board meetings, in
accordance with Company policy.
3. Compensation. In lieu of the compensation and all other arrangements
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specified in Article 4 of the Agreement, and as full consideration
for the early termination of the Consulting Services and ongoing
service as a member of the Board of Directors of the Company, the
Company shall pay to Consultant a fee of $145,833.31, such fee to be
paid to Consultant upon
execution of this Amendment. Additionally, in lieu of any bonus
stated in the Agreement on completion of the initial public offering
of the Company's stock, Company shall pay to Consultant a
discretionary bonus based upon performance of $106,250, such amount
to be payable on execution of this Agreement.
4. Options. The options to purchase 625,000 shares of common stock of
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the Company specified in Article 5 of the Agreement, and the vesting
schedule, lock up provisions, registration rights and acceleration
events specified therein shall continue in effect as specified
therein.
Except as expressly provided herein, the Agreement shall remain in full
force and effect, and the parties agree to be bound by the terms thereof, as
amended herein.
Prodigy Communications Corporation
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Chief Executive Officer
By: /s/ Xxxxxxx X. Pillar
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Xxxxxxx X. Pillar
