Exhibit 10.24
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 22, 1999, by and between
AboveNet Communications Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), and Xxxxxxx Xxxx ("Executive").
WHEREAS, the Company, Metromedia Fiber Network, Inc., a Delaware
Corporation ("MFN"), and Magellan Acquisition, Inc. a Delaware corporation and a
wholly owned subsidiary of MFN ("Merger Sub"), have entered into an Agreement
and Plan of Merger (the "Merger Agreement"), dated as of the date hereof,
pursuant to which the Company will merge with and into Merger Sub with the
Company as the surviving corporation (the "Merger") .
WHEREAS, effective on the date set forth in Section 6 herein, Executive
desires to provide his services and the Company desires to retain the services
of Executive for the Company;
WHEREAS, the Company and Executive desire to formalize the terms and
conditions of Executive's employment.
NOW, THEREFORE, the Company and Executive hereby agree as follows:
1. EMPLOYMENT.
1.1 GENERAL. Effective at the date set forth in Section 6 of
this Agreement, the Company hereby employs Executive in the capacity of Chief
Executive Officer of the Company. Executive hereby accepts such employment, upon
the terms and subject to the conditions herein contained. In addition, Executive
will serve as a member of the Board of Directors of MFN (the "Board").
1.2 DUTIES. During Executive's employment with Employer,
Executive shall report directly to MFN's Chief Executive Officer (the "CEO") or
the Board and shall be responsible for performing those duties consistent with
the position of Chief Executive Officer of the Company as may from time to time
be reasonably assigned to or requested of Executive by the CEO or the Board;
provided, that Executive's duties shall be considered to be strategic and not
operational in nature. Executive shall use his reasonable best efforts to
perform faithfully, diligently, effectively and to the best of his ability such
responsibilities and in accordance with sound business practices. Executive
shall conduct all of his activities in a manner so as to maintain and promote
the business and reputation of the Company.
1.3 FULL-TIME POSITION. Executive, during his employment with
Company, shall devote all of his business time, attention and skills to the
business and affairs of Company. Notwithstanding the foregoing sentence,
Executive may also serve as a director (but not as an employee or officer) to
any other company that is not "directly competitive" with MFN or the Company
upon prior notice to the Board which shall determine in its sole discretion
whether such other company is or is not "directly
competitive" with MFN or the Company.
1.4 LOCATION OF EMPLOYMENT. Executive's principal place of
employment during his employment shall be in San Jose, California. In the event
that MFN shall change the location of Company's principal office from San Jose,
California, and Executive does not terminate his employment pursuant to Section
3.1.4 hereof, Executive shall be entitled to be reimbursed for relocation
expenses documented in accordance with MFN's reimbursement policies, including
moving costs, temporary housing, commuting expenses and other relocation costs
(collectively, the "Relocation Expenses") not to exceed $100,000; provided, that
if the principal location of the Company is changed to a state or territory not
within the continental United States or to a foreign country, Executive and the
Board shall mutually agree upon an appropriate amount in excess of $100,000 to
cover such Relocation Expenses.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. Executive shall be paid, and Executive shall
accept, as full compensation for any and all services rendered and to be
rendered by him to the Company in all capacities during the term of his
employment under this Agreement, (a) an initial base salary at the annual rate
of Two-Hundred and Fifty Thousand Dollar ($250,000) for each year of the term,
or at such higher rate as the Board shall determine in its sole discretion
("Base Salary"), payable in accordance with the regular payroll practices of
MFN, and (b) the additional benefits hereinafter set forth in this Section 2.
Not later than on each anniversary of the Effective Date (as defined herein)
during the Employment Term, the Board shall review Executive's Base Salary and
such Base Salary shall be increased each year by at least 10% of such greater
amount as may be determined by the Board; Executive's Base Salary shall not be
decreased during the Employment Term.
2.2 ADDITIONAL COMPENSATION. Executive shall be entitled to an
annual bonus of One Hundred and Fifty Thousand Dollars ($150,000) for each year
of the Employment Term, based upon performance targets established by the Board
at the beginning of each year of employment hereunder.
2.3 STOCK OPTIONS. Upon consummation of the Merger, Executive
will be entitled to receive options to purchase 500,000 shares of MFN Class A
common stock under MFN's 1997 Incentive Stock Plan (the "Plan") at an exercise
price equal to the fair market value on the date of grant, which options shall
be issued first, as incentive stock options (within the meaning of section 422
of the Internal Revenue Code of 1986, as amended) up to the maximum authorized
by law and the Plan with the balance of such options being issued as
non-qualified stock options under the Plan.
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Executive shall be vested in 33.33% of the option shares on the first
anniversary of the Effective Date, and in 33.33% of the option shares on each of
the second and third anniversaries of the Effective Date.
2.4 EXECUTIVE BENEFITS.
2.4.1 EXPENSES. MFN shall or shall cause the Company
to reimburse Executive for expenses he reasonably incurs in connection with the
performance of his duties (including business travel and entertainment expenses)
all in accordance with MFN's policies with respect thereto.
2.4.2 EMPLOYER PLANS. Executive shall be entitled to
participate in such executive benefit plans and programs as MFN may from time to
time offer or provide to similarly situated executives of MFN, including, but
not limited to, participation in life insurance, health and accident, medical
and dental, disability and retirement plans and programs.
2.4.3 VACATION. Executive shall be eligible for four
weeks' paid vacation leave annually.
2.4.4 CAR ALLOWANCE. MFN shall or shall cause the
Company to pay to Executive a car allowance of $800 per month.
2.4.5 COMMUNICATION MEDIA. MFN shall or shall cause
the Company to purchase for Executive such voice, video and data communication
equipment as Executive shall need for communication between his home office,
business office and while in transit and shall pay all fees for operation,
maintenance and service associated with such equipment. MFN shall or shall cause
the Company to reimburse Executive for all business transmissions or calls
related to Executive's employment made to or from such equipment within 30 days
after receipt of the bills for such transmissions or calls.
2.4.6 NORTHWESTERN MUTUAL LIFE. It is specifically
understood and acknowledged that, in addition to all benefits provided for
herein or in the Merger Agreement, MFN shall or shall cause Company to continue
to pay all current insurance policies covering Executive[, including but not
limited such policies] with Northwestern Mutual Life.
2.5 EMPLOYMENT TERM. Executive's employment with Company
pursuant to this Agreement shall commence on the Effective Date of this
Agreement. Except as provided in Section 3.1 hereof, Executive's employment by
Company pursuant to this Agreement shall continue until the third anniversary of
the Commencement Date (the "Initial Term"). Thereafter, this Agreement shall
automatically be renewed for successive one-year periods unless terminated by
either
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party upon written notice to the other given not less than three (3) months
prior to the termination of the Initial Term or each Additional Term (the
Initial Term, together with any subsequent employment period or periods, being
referred to herein as the "Employment Term").
2.6 DISABILITY POLICY. Company will maintain an accident and
disability policy for Executive during his employment period. The policy shall
not be for less than 60% of Executive's Base Salary.
3. TERMINATION OF EMPLOYMENT.
3.1 EVENTS OF TERMINATION. Executive's employment with Company
shall terminate upon the occurrence of any one or more of the following events:
3.1.1 DEATH. In the event of Executive's death,
Executive's employment shall terminate on the date of death.
3.1.2 DISABILITY. In the event of Executive's Disability
(as hereinafter defined), the Company shall have the option to terminate
Executive's employment by giving a notice of termination to Executive. The
notice of termination shall specify the date of termination, which date shall
not be earlier than 30 days after the notice of termination is given. For
purposes of this Agreement, "Disability" means the inability of Executive to
substantially perform his duties hereunder for 180 days out of 365 consecutive
days as a result of a physical or mental illness, all as determined in good
faith by the Board.
3.1.3 TERMINATION BY COMPANY FOR CAUSE. The Company may,
at its option, terminate Executive's employment for "Cause," based on objective
factors determined in good faith by a majority of the Board, by giving a notice
of termination to Executive specifying the reasons for termination and, if
Executive shall fail to cure the same within 30 days of his receiving the notice
of termination, his Employment shall terminate at the end of such 30-day period.
"Cause" shall mean (a) Executive's conviction of, guilty or "no contest" plea
to, or confession of guilt of a felony, (b) a willful act by Executive which
constitutes gross misconduct and which is materially injurious to Company or MFN
(c) violation by Executive of the Inventions Agreement (as defined in Section
4.1 hereof) without the prior written consent of Company or (d) the failure to
comply with any lawful instructions of the President of MFN or the Board or any
lawful and reasonable policies of MFN or the Company.
3.1.4 MFN'S MATERIAL BREACH. Executive may, at his
option, terminate Executive's employment upon MFN's Material Breach of this
Agreement by
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giving MFN written notice of such breach (which notice shall identify the manner
in which MFN has materially breached this Agreement) and, if such breach is not
cured within 30 days of MFN's receiving such written notice, Executive's
employment shall terminate at the end of such 30-day period. "MFN's Material
Breach" of this Agreement shall mean (a) the failure of MFN or the Company to
pay Executive's Base Salary or additional compensation hereunder in accordance
with this Agreement, (b) (x) a change in the reporting structure described in
Section 1.2 hereof or (y) the assignment by MFN or the Company to Executive
without Executive's consent of duties materially inconsistent with his duties,
as set forth in Section 1.2 hereof, (c) the relocation by MFN or the Company of
Executive to a geographic location other than San Jose, California, or (d) the
non-reelection of Executive to the Board (other than by action of MFN's
shareholders).
3.2 CERTAIN OBLIGATIONS OF COMPANY FOLLOWING TERMINATION OF EXECUTIVE'S
EMPLOYMENT. Following the termination of Executive's employment under the
circumstances described below, Company shall pay to Executive in accordance with
its regular payroll practices the following compensation and provide the
following benefits in full satisfaction and final settlement of any and all
claims and demands that Executive now has or hereafter may have against Employer
under this Agreement:
3.2.1 DEATH. Disability. In the event that Executive's employment
is terminated by reason of Executive's death or Disability, Executive or his
estate, as the case may be, shall be entitled to the following payments:
(a) Base Salary through the date Executive's employment is
terminated;
(b) Any additional compensation (including compensation
pursuant to Section 2.2 and reimbursement pursuant to Section 2.4.1 hereof),
prorated to the date of death of Executive or the date of termination due to
Executive's Disability; and
(c) Company shall pay to Executive or his estate, as the
case may be, the amounts and shall provide all benefits generally available
under the employee benefit plans, policies and practices of Company, determined
in accordance with the applicable terms and provisions of such plans, policies
and practices in each case, as accrued to the date of termination or otherwise
payable as a consequence of Executive's death or Disability.
3.2.2 TERMINATION WITHOUT CAUSE BY MFN; MFN'S MATERIAL
BREACH. In the event that Executive's employment is terminated without Cause
(including any termination by the Company (or its successor) following the
occurrence of a Change of Control of MFN as such term is defined in the Plan),
or upon MFN's Material Breach, Executive shall be entitled to the following
payments and benefits:
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(a) Base Salary through the date Executive's employment is
terminated;
(b) Any additional compensation (including compensation pursuant
to Section 2.2 hereof, reimbursements pursuant to Section 2.4.1 hereof and
benefits pursuant to Section 2.4.2 hereof), prorated to the date Executive's
employment is terminated hereunder;
(c) Continuing payments of Base Salary, payable in accordance
with the regular payroll practices of Company, for 18 months following the date
of termination of Executive's employment;
(d) Continued coverage for Executive and his dependents for 2
years under any group health, life and disability insurance plans sponsored by
MFN or the Company at premium rates in effect at the time of termination; and
(e) Immediate vesting of all options.
3.2.3 TERMINATION BY COMPANY FOR CAUSE. In the event Executive's
employment is terminated by Company pursuant to Section 3.1.3 hereof, Executive
shall be entitled to no further compensation or other benefits under this
Agreement except as to that portion of any unpaid Base Salary and other benefits
accrued and earned by him hereunder, including compensation pursuant to Section
2.2 hereof, reimbursements pursuant to Section 2.4.1 hereof and benefits
pursuant to Section 2.4.2 hereof, up to and including the effective date of such
termination. In addition, Executive shall be entitled to receive any additional
compensation earned but not yet paid with respect only to any fiscal year prior
to the fiscal year of termination.
3.3 NATURE OF PAYMENTS. All amounts to be paid by Company to
Executive pursuant to this Section 3 are considered by the parties to be
severance payments. In the event such payments are treated as damages, it is
expressly acknowledged by the parties that damages to Executive for termination
of employment would be difficult to ascertain and the above amounts are
reasonable estimates thereof.
3.4 DUTIES UPON TERMINATION. Upon termination of Executive's employment
with Company pursuant to Sections 3.1.1 through 3.1.4 hereof or upon expiration
of the Employment Term, Executive shall be released from any duties and
obligations hereunder (except those duties and obligations set forth in Sections
4, 7.11 and 7.12 hereof). Upon termination of Executive's employment with the
Company pursuant to Sections 3.1.1 through 3.1.4 hereof, the obligations of the
Company to
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Executive shall be as set forth in Section 3.2 hereof.
4. CONFIDENTIALITY; NON-SOLICITATION; NON-COMPETE.
4.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. As a condition of his
employment hereunder, Executive shall have executed the Company's standard form
of Proprietary Information and Inventions Agreement (the "Inventions Agreement")
which is hereby incorporated herein by reference thereto.
4.2 CERTAIN ACTIVITIES. Except with respect to the individuals listed on
Exhibit 4.2 to this Agreement which is hereby incorporated by reference into
this Agreement, during the Executive's employment and for a period of two years
after the termination of Executive's employment, Executive shall not directly or
indirectly hire, offer to hire, entice away or in any other manner persuade or
attempt to persuade any officer, employee, agent, lessor, lessee, licensor,
licensee, customer, prospective customer, supplier or shareholder or prospective
shareholder of MFN or the Company to discontinue or alter his, her or its
relationship with MFN or the Company.
4.3 COVENANT NOT TO COMPETE. During the Executive's employment and for a
period of 18 months after the termination of Executive's employment, but only so
long as Executive is receiving severance payments pursuant to Section 3.2
hereof, Executive shall not directly or indirectly engage in competition with
the Company by serving as an officer, director or employee of, or consultant to,
any competitor of MFN or the Company that sells or offers to sell any products
or services which compete directly or indirectly with the products or services
offered or sold by MFN or the Company or being developed by MFN or the Company
for sale at the time of termination of Executive, or induce or attempt to
induce, directly or indirectly, any then potential customer contemplating doing
business with MFN or the Company to not commence doing business, or any then
current customer of MFN or the Company to cease doing business, in whole or in
part, with MFN or the Company or nor will Executive solicit business of any such
customer for any products or services of any competitor of MFN or the Company
which compete with the products or services offered or sold by MFN or the
Company or being developed by MFN or the Company for sale at the time of
termination of Executive.
4.4 INJUNCTIVE RELIEF. Executive acknowledges and agrees that (a) MFN
and the Company will be irreparably injured in the event of a breach by
Executive of any of his obligations under this Section 4, (b) monetary damages
will not be an adequate remedy for any such breach, (c) MFN and the Company
shall be entitled to injunctive relief, in addition to any other remedy which
they may have, in the event of any such breach, including, but not limited to,
termination of Executive's employment for Cause and (d) the existence of any
claims which Executive may have against MFN or the Company, whether under this
Agreement or otherwise, shall not be a defense to the enforcement by MFN or the
Company of any of its rights under this
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Section 4.
4.5 NON-EXCLUSIVITY AND SURVIVAL. The covenants and obligations of
Executive contained in this Section 4 are in addition to, and not in lieu of,
any covenants and obligations which Executive may have with respect to the
subject matter hereof, whether by contract, as a matter of law or otherwise, and
such covenants and obligations, and their enforceability, shall survive any
termination of Executive's employment by either party and any investigation made
with respect to the breach thereof by the Company at any time.
5. REPRESENTATIONS AND WARRANTIES.
5.1 EXECUTIVE'S REPRESENTATIONS. Executive represents and warrants to
each of the Company and MFN that: (a) Executive has full power and authority to
enter into this Agreement and the Inventions Agreement, and this Agreement and
the Inventions Agreement have been or will be duly and validly executed and
delivered by Executive and when so executed and delivered constitute the legal,
valid and binding obligation of Executive, enforceable against Executive in
accordance with its terms; (b) the execution and delivery of this Agreement and
the Inventions Agreement by Executive and Executive's performance hereunder and
thereunder will not violate any provision of law and will not conflict with or
result in a breach of any judgment, decree, order, writ, injunction, regulation,
ordinance or other similar document or instrument of any court or governmental
authority, and will not (with or without the giving of notice or lapse of time,
or both) violate or breach any term or condition of, or constitute a default
under, any agreement, document or instrument to which Executive is a party or by
which he is bound; and (c) the execution and delivery of this Agreement and the
Inventions Agreement by Executive and Executive's performance hereunder and
thereunder do not require the consent or approval of any other person or entity.
5.2 COMPANY'S REPRESENTATIONS. The Company represents and warrants to the
Executive that: the Company has full power and authority to enter into this
Agreement and the Inventions Agreement, and this Agreement and the Inventions
Agreement have been or will be duly and validly executed and delivered by the
Company and when so executed and delivered constitute the legal, valid and
binding obligation of Company enforceable against the Company in accordance with
its terms;
The execution and delivery of this Agreement and the Inventions Agreement
by the Company and the Company's performance hereunder and thereunder will not
violate any provision of law and will not conflict with or result in a breach of
any judgement, decree, order, writ, injunction, regulation, ordinance or other
similar document or instrument of any court or governmental authority, and will
not (with or without the giving of notice or lapse of time, or both) violate or
breach any term or condition of, or constitute a default under, any agreement,
document or instrument to
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which the Company is a party or by which he is bound; and
The execution and delivery of this Agreement and the Inventions Agreement
by the Company and the Company's performance hereunder and thereunder do not
require the consent or approval of any other person or entity.
6. EFFECTIVENESS. This Agreement shall not become effective unless and
until the date and time at which the Merger is consummated in accordance with
the terms of the Merger Agreement (such date is referred to herein as the
"Effective Date"). Upon effectiveness of this Agreement as provided for in this
Section 6, the Employment Agreement, dated as of June 1, 1998, between Executive
and the Company, including any attachments or exhibits thereto, and any
agreement related thereto between the Company and Executive (collectively, the
"Old Agreement"), shall be terminated and of no further force and effect between
the parties thereto and none of the parties thereto will be entitled to any
further rights thereunder. If the Merger Agreement is terminated prior to the
consummation of the Merger, this Agreement shall be deemed invalid and of no
force and effect.
7. MISCELLANEOUS PROVISIONS.
7.1 SEVERABILITY. If in any jurisdiction any term or provision hereof is
determined to be invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired, (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction and (c) the invalid or
unenforceable term or provision shall, for purposes of such jurisdiction, be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
7.2 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement (and all signatures need not appear
on any one counterpart), and this agreement shall become effective when one or
more counterparts has been signed by each of the parties hereto and delivered to
each of the other parties hereto.
7.3 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered by
hand, or when delivered if mailed by registered or certified mail or private
courier service, postage prepaid, return receipt requested or via facsimile
(with written confirmation of receipt) as follows:
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If to the Company, to:
AboveNet Communications Inc.
00 X. Xxx Xxxxxxxx Xxxxxx
Xxxxx #0000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: President
Telefax No. : (000) 000-0000
with a copy (which shall not constitute notice) to:
Metromedia Company
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telefax No. : (000) 000-0000
If to Executive, to:
Xxxxxxx Xxxx
0000 Xxxxxxxxxx Xx.
Xxxxxxxx, XX 00000
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxx, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address(es) as a party hereto shall have designated by like
notice to the other parties hereto.
7.4 AMENDMENT. No provision of this Agreement may be modified, amended,
waived or discharged in any manner except by a written instrument executed by
the Company and Executive.
7.5 ENTIRE AGREEMENT. This Agreement and the Inventions Agreement,
including any attachments and exhibits thereto, between the parties of even
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date herewith constitute the entire agreement of the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings of the parties hereto, oral or written, with respect to the
subject matter hereof; provided, however, that the Old Agreement shall remain in
full force and effect unless and until this Agreement becomes effective under
Section 6 hereof.
7.6 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made
and to be wholly performed therein without regard to its conflicts or
choice-of-law provisions.
7.7 HEADINGS. The headings contained herein are for the sole purpose of
convenience of reference and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
7.8 BINDING EFFECT. Successors and Assigns. Executive may not delegate
his duties or assign his rights hereunder. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns.
7.9 WAIVER; ETC. The failure of either of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach of any of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the party against
whom or which enforcement of such waiver is sought, and no waiver of any such
breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
7.10 THIRD PARTY BENEFICIARY. MFN shall be deemed to be a third party
beneficiary under this Agreement and this Agreement expressly confers upon MFN
the same rights and remedies that are available to the Company under this
Agreement as if MFN were a party to this Agreement
7.11 ENFORCEMENT. If any party institutes legal action to enforce or
interpret the terms and conditions of this Agreement, the prevailing party shall
be awarded reasonable attorneys' fees at all trial and appellate levels, and the
expenses and costs incurred by such prevailing party in connection therewith.
7.12 CONTINUING EFFECT. Where the context of this Agreement requires, the
respective rights and obligations of the parties shall survive any
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termination or expiration of the term of this Agreement.
7.13 EXPENSES. Each party to this Agreement agrees to bear his or its own
expenses in connection with the negotiation and execution of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered by Company and Executive as of the date first above written.
AboveNet Communications Inc.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
EXECUTIVE
/s/ Xxxxxxx Xxxx
---------------------------------------
Name: Xxxxxxx Xxxx
Accepted and Agreed to as of the date
first written above by:
Metromedia Fiber Network, Inc.
By: Xxxxxx X. Xxxxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President, Chief Operating Officer
and Director
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