Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT"), effective as of December __, 2000,
is made and entered by and between XXXX XXXXXX (the "EXECUTIVE") and NX
NETWORKS, INC., a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Company desires to engage the Executive to provide services
pursuant to the terms of this Agreement; and
WHEREAS, the Executive desires to provide such services to the Company pursuant
to the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. TERM OF EMPLOYMENT
The term of the Executive's employment under this Agreement shall
commence on January 3rd, 2001 and end on the third anniversary of such date (the
"Term of Employment"). If the Company or the Executive does not deliver to the
other party at least 60 days prior to the end of the three year term, written
notice that the Term of Employment shall end on January 3, 2004, the Term of
Employment shall automatically continue for an additional one-year period. At
the end of such one year period, the Term of Employment shall automatically
continue for successive one year terms unless either party delivers at least 60
days prior written notice that the Term of Employment shall end at the end of
such one-year renewal period.
2. DUTIES
(a) During the Term of Employment, the Executive shall serve as the
Chief Executive Officer and, as provided in Section 2(b) below, a Director of
the Company with such authority and duties as are generally associated with such
position and as may be assigned to him from time to time by the Board of
Directors of the Company that are consistent with such authority and duties. The
Executive shall report to the Chairman of the Board of Directors of the Company,
or someone or some body within the Board if there is no Chairman or if the
Executive becomes the Chairman.
(b) During the Term of Employment and except as provided in Section
2(c), the Executive shall devote his full business time and best efforts to the
business and affairs of the Company. The Executive agrees to continue to serve
during the Term of Employment as a Director and a member of any committee of the
Board of Directors of the Company that the Board may designate. The Company
agrees to use its commercially reasonable best efforts to cause the Executive to
be elected and continued in office throughout the Term of Employment as a member
of the Board of Directors of the Company and shall include him in the management
slate for election as a Director of the Company at every stockholders' meeting
of the Company at which his term as a Director would otherwise expire.
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(c) Anything herein to the contrary notwithstanding, nothing in this
Agreement shall preclude the Executive from (i) serving on the boards of
directors of other corporations or the boards of a reasonable number of trade
associations and/or charitable organizations, in each case subject to the prior
approval of the Board of Directors of the Company (not to be unreasonably
withheld), (ii) engaging in charitable activities and community affairs and
(iii) managing his personal investments and affairs, provided that such
activities do not interfere with the proper performance of his duties and
responsibilities under this Agreement. The Company agrees that the Executive may
continue to serve in all board positions disclosed to the Company prior to the
date of this Agreement.
3. NO CONFLICT OF INTEREST
The parties certify that the Executive has advised the Company of his
professional and business relationship with Xxxx Xxxxxxxxxxx. The business
relationship is that the Executive was a member of the Board of Advisors for
E-Goo Venture Fund, of which Xx. Xxxxxxxxxxx was a managing partner. That
business relationship is expected to continue in some form. The Company
acknowledges that this relationship does not create a conflict of interest for
the Executive or diminish in any respect the Executive's capacity to enter this
Agreement or to perform the job and duties described in this Agreement.
4. COMPENSATION AND RELATED MATTERS
(a) SALARY. During the Term of Employment, the Executive shall receive
a base salary (the "Base Salary") at the rate of $260,000 per annum. Such Base
Salary shall be payable semi-monthly in accordance with the Company's policies
in effect from time to time. The Board of Directors from time to time may
increase, but not decrease, the Base Salary.
(b) BONUS. The Executive shall be eligible for a quarterly bonus in
such amount as the Board of Directors may designate. Payment of any annual bonus
shall be made at the same time that other senior-level executives receive their
bonus but in no event later than fifteen days after the close of the period to
which such bonus relates.
(c) STOCK OPTIONS. To induce the Executive to enter into this
Agreement, the Executive is hereby granted an option (the "Stock Option") by the
Company to purchase shares of common stock, par value $0.05 per share, of the
Company (the "Common Stock"). The Stock Option shall be memorialized in a
separate stock option agreement, dated the date hereof, between the Company and
the Executive. The Stock Options will be in two tranches.
The first tranche of the Stock Option will be for 2,000,000 shares of Common
Stock, and will have an exercise price per share equal to the closing market
price per share of the Common Stock on the date of this Agreement. This tranche
of the Stock Option shall vest over time as follows and be subject to earlier
vesting as described below.
Time vesting:
500,000 shares subject to the Stock Option shall vest on January 3, 2001, and
250,000 shares subject to the Stock Option shall vest thereafter on each
six-month anniversary of such date.
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Accelerated vesting of the number of shares indicated below, or such lesser
amount as remains unvested at the time of the acceleration event, for any
one-year period will occur as follows:
NO. SHARES VESTING EVENT
250,000 Common Stock trades at $5/share for 10 consecutive trading days
250,000 Common Stock trades at $8/share for 10 consecutive trading days
250,000 Common Stock trades at $12/share for 10 consecutive trading days
The price points designated above refer to the last reported sales price for the
trading day.
The second tranche of the Stock Option will be for 1,200,000 shares of Common
Stock and will have an exercise price equal to the last reported sales price of
the Common Stock on the date of this Agreement. Vesting of this tranche of the
Stock Option will occur in equal quarterly increments over a three-year period
commencing on January 3, 2001, e.g. 100,000 shares vest quarterly.
As soon as reasonably practicable, the Company shall use its best efforts to
register the shares underlying the Stock Options on Securities and Exchange
Commission Form S-8, including the registration of any shares underlying Stock
Options vested prior to the date of filing such Form S-8.
Furthermore, the Company will permit the Executive to exercise some or all of
his Stock Options described in this Section 4 prior to the full vesting of such
Stock Options. If requested by the Executive, the Company will loan the
Executive an amount equal to the total purchase price for the Stock Options
included in this Section 4 which the Executive elects to exercise prior to
vesting. Any such loan shall be a full recourse loan. In addition, the loan
shall be secured by the shares of Common Stock of the Company purchased by the
Executive with the proceeds thereof. Each such loan will bear interest at the
market rate of interest as determined by the Company's independent accountants,
or the maximum rate permissible by law (which under the laws of the Commonwealth
of Virginia deemed to be the laws relating to permissible rates of interest on
commercial loans), whichever is less, and shall become due and payable no later
than January 3, 2004. The stock shall be held in escrow by the Company until
vesting occurs at which time the Executive may chose to receive the stock in
exchange for repayment of the pro-rata amount of the loan. The Executive may
elect to file an election under Section 83(b) of the Code within thirty (30)
days of the date of purchase of the shares.
(d) EXPENSES. The Executive is authorized to incur reasonable expenses
in carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all business expenses incurred in
connection therewith, subject to documentation in accordance with the Company's
policy.
(e) EMPLOYEE BENEFITS. During the Term of Employment, the Executive
shall be entitled to participate in or receive benefits under any and all
employee benefit plans, programs and arrangements on terms no less favorable
than those generally applicable to senior executives of the Company, subject to
and on a basis consistent with the terms, conditions and overall administration
of such employee benefit plans, programs and arrangements. The Executive shall
also be eligible to participate in the Company's executive perquisites in
accordance with the terms and provisions of the arrangements as in effect from
time to time for the Company's senior executives. The Executive will receive a
medical insurance coverage family plan as offered to other Executives. For the
Term of Employment, said medical insurance coverage shall be for the maximum
coverage available for said medical coverage. The Executive will receive life
insurance coverage as comparable to that, which is offered to any other
executive.
(f) VACATION. The Executive shall be entitled to four weeks of paid
vacation for each 12-month period during the Term of Employment, which shall be
taken at such times and intervals as shall be determined by the Executive,
subject to the reasonable business needs of the Company. The Executive shall
also be entitled to the paid holidays and other paid leave set forth in the
Company's policies.
(g) PAYMENT UPON CHANGE OF CONTROL. In the event of a Change of Control
of the Company, as defined in the Company's 1999 Long Term Incentive Plan, the
Company shall issue to the Executive 400,000 shares of Common Stock, subject to
proportionate adjustment in the case of dividends paid on the Common Stock in
additional shares of Common Stock, and stock dividends and consolidations
involving the Common Stock and equitable adjustment in the event of a
reclassification or other reorganization affecting the Common Stock (or, if the
Common Stock was modified, exchanged or converted in connection with such Change
of Control, the cash, securities or other property that such 400,000 shares
would represent at the time of the Change of Control if they had been modified,
exchanged or converted in connection with such Change of Control). Such Common
Stock will be registered by the Company (or its successor) with the Securities
and Exchange Commission at the time of, or as soon as possible after, such
issuance.
(h) CASH PAYMENT IN CERTAIN CIRCUMSTANCES. In the event that the equity
compensation to the Executive set forth in this Agreement is determined by the
Company to require stockholder approval under applicable regulations of the
Nasdaq Stock Market, then the Stock Options provided herein will be reduced to
the largest number of Stock Options that could be issued to the Executive
without such stockholder approval. In lieu of the Stock Options that are
eliminated as a result of this provision, the Company will treat such Stock
Options as stock appreciation rights having an exercise price equal to the
exercise price of such Stock Options and, upon vesting and exercise thereof by
the Executive, pay to the Executive, in cash, the difference between the
exercise price of such stock appreciation rights and the closing market price of
the Common Stock on the date the Executive exercises such rights. If any Stock
Options are converted into stock appreciation rights, the Executive and the
Company will enter into an agreement delineating such rights, which will be as
comparable as practicable to the rights and responsibilities of the parties
under the stock option agreement between the Executive and the Company.
Notwithstanding the foregoing, if the equity compensation to the Executive set
forth in this Agreement is determined by the Company to require stockholder
approval under applicable regulations of the Nasdaq Stock Market, and such
approval can be obtained at that time or the grant of such equity compensation
can be ratified by stockholder approval, then in lieu of converting Stock
Options into stock appreciation rights the Company will undertake its reasonable
efforts to obtain such stockholder approval in order that the Stock Options will
not be affected.
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(i) DEDUCTIONS AND WITHHOLDINGS TAX GROSS-UP IN CERTAIN
CIRCUMSTANCES.
(i) All amounts payable or which become payable hereunder shall be
subject to all deductions and withholding required by law.
(ii) Notwithstanding the subsection (h)(i) above, if as a result
of a Change of Control the Executive becomes subject to Section 280G of the Code
(or any successor provision) which imposes an excise tax in respect of the
issuance of any payment to the Executive under this Agreement, then the Company
shall pay to the Executive, in cash at the time of such Change of Control, a
"tax gross-up" equal to the amount of the Executive's tax liability resulting
from such excise tax (including any tax on the amount so paid to cover this
obligation calculated at the highest marginal federal and state income tax
rates).
(iii) The accounting firm engaged by the Company for general audit
purposes as of the day prior to the effective date of the Change of Control
shall calculate the gross-up payment. If the accounting firm so engaged by the
Company is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Company shall appoint a nationally
recognized accounting firm to make the determinations required hereunder. The
Company shall bear all expenses with respect to the determinations by such
accounting firm required to be made hereunder.
(iv) The accounting firm engaged to make the determinations
hereunder shall provide its calculations, together with detailed supporting
documentation, to the Company and Executive within fifteen (15) calendar days
after the date on which Executive's right to a payment is triggered (if
requested at that time by the Company or Executive) or such other time as
requested by the Company or Executive. If the accounting firm determines that no
excise tax is payable with respect to a payment, it shall furnish the Company
and Executive with an opinion reasonably acceptable to Executive that no excise
tax will be imposed with respect to such payment. Any good faith determinations
of the accounting firm made hereunder shall be final, binding and conclusive
upon the Company and Executive.
(v) The Company agrees to make reasonable efforts to obtain the
requisite stockholder approval under Section 280G of the Code to avoid the
imposition of an excise tax.
(vi) If a transaction occurs which may invoke the provisions of
Section 280G, the Executive shall cooperate with the Company to structure
payments to the Executive in a manner to eliminate or minimize the effect upon
the Company of Section 280G provided that such cooperation will not adversely
affect the Executive.
5. TERMINATION OF EMPLOYMENT
(a) TERMINATION DUE TO DEATH. In the event the Executive's employment
is terminated due to his death, his estate or his beneficiaries, as the case may
be, shall be entitled to and their sole remedies under this Agreement shall be:
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(i) Base Salary through the date of death which shall be paid in a
single lump sum not later than required by law;
(ii) the balance of any bonus awarded and earned but not paid at
the time of termination, which shall be paid in a single lump sum not later than
required by law; and
(iii other or additional benefits then due or earned in
accordance with applicable plans and programs of the Company.
(b) TERMINATION DUE TO DISABILITY. In the event the Executive becomes
Disabled (as defined below), the Company may terminate his employment upon
notice to that effect, subject to compliance with the Americans With
Disabilities Act and applicable state disability laws. Upon such a termination,
the Executive or his representative, as the case may be, shall be entitled to,
and their sole remedies under this Agreement shall be:
(i) Base Salary through the date of termination, which shall be
paid in a single lump sum not later than required by law following such
termination;
(ii) the balance of any bonus awarded and earned but not paid at
the time of termination, which shall be paid in a single lump sum not later than
required by law following the date of termination; and
(iii) other or additional benefits then due or earned in
accordance with applicable plans and programs of the Company.
For the purpose of this subsection, the Executive shall have a "Disability" at
such time as he becomes entitled to benefits under the Company's long-term
disability insurance plan as in effect from time to time.
(c) TERMINATION BY THE COMPANY FOR CAUSE.
(i) "Cause shall mean:
(A) willful and material breach by Executive of Section 6 or
7 of this Agreement;
(B) conviction of the Executive for a felony or misdemeanor
involving moral turpitude;
(C) breach by the Executive of any alcohol, drug, or sexual
harassment policy of the Company which provides for termination of employment
for violation; or
(D) engagement by the Executive in conduct that constitutes
gross neglect or willful gross misconduct in carrying out his duties under this
Agreement.
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For purposes of this Agreement, an act or failure to act on Executive's part
shall be considered "willful" if it was done or omitted to be done by him not in
good faith, and shall not include any act or failure to act resulting from any
incapacity of Executive.
(ii) In the event the Company terminates the Executive's
employment for Cause, he shall be entitled to and his sole remedies under this
Agreement shall be:
(A) Base Salary through the date of the termination of his
employment for Cause, which shall be paid in a single lump sum not later than
required by law following the Executive's termination of employment;
(B) the balance of any bonus awarded and earned but not paid
at the time of termination, which shall be paid in a single lump sum not later
than required by law following the date of termination; and
(C) other or additional benefits then due or earned in
accordance with applicable plans or programs of the Company.
(d) TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION WITHOUT
CAUSE. In the event the Executive's employment with the Company is terminated
without Cause (which termination shall be effective as of the date specified by
the Company in a written notice to the Executive), other than due to death or
Disability, or in the event there is a Constructive Termination Without Cause
(as defined below), the Executive shall be entitled to and his sole remedies
under this Agreement shall be:
(i) Base Salary through the date of termination of the Executive's
employment, which shall be paid in a single lump sum not later than 15 days
following the Executive's termination of employment;
(ii) Base Salary, at the annualized rate in effect on the date of
termination of the Executive's employment for a period of one year after the
termination of employment (the "SEVERANCE PERIOD") payable in accordance with
the Company's standard payroll practices;
(iii) the balance of any bonus awarded and earned but not paid at
the time of termination, which shall be paid in a single lump sum not later than
required by law following the date of termination;
(iv) immediate vesting of all shares subject to the stock options
which are unvested, all of which will be exercisable during the Severance Period
or for the remainder of the term of the option, if less;
(v) continued participation in all medical, health and life
insurance plans at the same benefit level at which he was participating on the
date of the termination of his employment until the earlier of:
(A) the end of the Severance Period; or
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(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such coverage
and benefits to be determined on a coverage-by-coverage, or benefit-by benefit,
basis); provided that (1) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in this clause
(v), he shall receive cash payments equal on an after-tax basis to the cost to
him of obtaining the benefits provided under the plan or program in which he is
unable to participate for the period specified in this clause (v), (2) such cost
shall be deemed to be the lowest reasonable cost that would be incurred by the
Executive in obtaining such benefit himself on an individual basis, and (3)
payment of such amounts shall be made quarterly in advance; and
(vi) other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company.
"TERMINATION WITHOUT CAUSE" shall mean the Executive's employment is terminated
by the Company for any reason during the term of this Agreement other than Cause
(as defined in Section 5(c)) or due to death or Disability.
"CONSTRUCTIVE TERMINATION WITHOUT CAUSE" shall mean a termination of the
Executive's employment at his initiative as provided in this Section 5(d)
following the occurrence, without the Executive's written consent, of one or
more of the following events (except as a result of a prior termination):
(A) a material diminution or change, adverse to Executive, in
Executive's positions, titles, or offices as set forth in Section 2;
(B) an assignment of any duties to Executive which are
inconsistent with his status as President and Chief Executive Officer;
(C) any other failure by the Company to perform any material
obligation under, or breach by the Company of any material provision of, this
Agreement that is not cured within 30 days;
(D) any failure to secure the agreement of any successor
corporation or other entity to the Company to fully assume the Company's
obligations under this Agreement; or
(E) Forced relocation of the Executive by the Company to a
work location greater than fifty (50) miles from the Company's facility in
Herndon, Virginia.
(e) TERMINATION FOLLOWING NON-RENEWAL. In the event that either
party notifies the other in writing at least 60 days prior to the expiration of
the then current Term of Employment that it is electing to terminate this
Agreement at the expiration of the then current Term of Employment and the
Executive's employment terminates upon such expiration, whether at the Company's
initiative or the Executive's initiative, the Executive shall be entitled to:
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(i) Base Salary through the date of termination of the Executive's
employment, which shall be paid in a single lump sum no later than required by
law following such termination;
(ii) the balance of any bonus awarded and earned but not paid at
the time of termination, which shall be paid in a single lump sum not later than
required by law following the date of termination;
(iii) continued participation in all medical and dental plans at
the same benefit level at which he was participating on the date of the
termination of his employment until the earlier of:
(A) the first anniversary of such termination; or
(B) the date, or dates' he received equivalent coverage and
benefits under the plans and programs of a subsequent employer (such coverage
and benefits to be determined on a coverage-by-coverage, or benefit-by-benefit,
basis); provided that (x) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided in this clause
(iii) of this Section 5(e), he shall receive cash payments equal on an after-tax
basis to the cost to him of obtaining the benefits provided under the plan or
program in which he is unable to participate for the period specified in this
clause (iii) of this Section 5(e), (y) such cost shall be deemed to be the
lowest cost that would be incurred by the Executive in obtaining such benefit
himself on an individual basis, and (z) payment of such amounts shall be made
quarterly in advance; and
(iv) other or additional benefits then due or earned in accordance
with applicable plans and programs of the Company.
(f) VOLUNTARY TERMINATION. In the event of a termination of employment
by the Executive on his own initiative other than (i) pursuant to Section 5(e),
(ii) a termination due to death or Disability or (iii) a Constructive
Termination Without Cause, the Executive shall have the same entitlements as
provided in Section 5(c)(ii) above for a Termination for Cause. A voluntary
termination under this Section 5(f) shall be effective upon 30 days prior
written notice to the Company or such shorter period as may be determined by the
Company.
(g) NO MITIGATION, NO OFFSET. In the event of any termination of
employment under this Section 5, the Executive shall be under no obligation to
seek other employment; amounts due the Executive under this Agreement shall not
be offset by any remuneration attributable to any subsequent employment that he
may obtain.
(h) NATURE OF PAYMENTS. Any amounts due under this Section 5 are in the
nature of severance payments considered to be ------------------- reasonable by
the Company and are not in the nature of a penalty.
6. CONFIDENTIALITY
(a) During the Term of Employment and thereafter, the Executive shall
not, without the prior written consent of the Company, disclose to anyone
(except in good faith in the ordinary course of business to a person who will be
advised by the Executive to keep such information confidential) or make use of
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any Confidential Information (as defined below) except in the performance of his
duties hereunder or when required to do so by legal process, by any governmental
agency having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) that requires
him to divulge, disclose or make accessible such information. In the event that
the Executive is so ordered, he shall give prompt written notice to the Company
in order to allow the Company the opportunity to object to or otherwise resist
such order.
(b) "CONFIDENTIAL INFORMATION" shall mean all information concerning
the business of the Company or any subsidiary relating to any of their products,
product development, trade secrets, customers, suppliers, finances, and business
plans and strategies. Excluded from the definition of Confidential Information
is information (i) that is or becomes part of the public domain, other than
through the breach of this Agreement by the Executive, (ii) regarding the
Company's business or industry properly acquired by the Executive in the course
of his career as an executive in the Company's industry and independent of the
Executive's employment by the Company, (iii) that becomes available to the
Executive on a non-confidential basis from a source other than the Company,
provided that such source is not known by the Executive to be subject to a
confidentiality agreement or other obligation of secrecy or confidentiality
(whether pursuant to a contract, legal or fiduciary obligation or duty or
otherwise) to the Company or any other person or entity or (iv) approved for
release by the Company or which the Company makes generally available to third
parties without an obligation of confidentiality. For this purpose, information
known or available generally within the trade or industry of the Company or any
subsidiary shall be deemed to be known or available to the public.
7. NON-COMPETITION; NON-SOLICITATION
The Executive acknowledges that his employment with the Company will,
of necessity, provide him with specialized, unique knowledge and confidential
information and that, in light of the competitive nature of the Company's
business, the Company could be harmed if such knowledge and information were
used in competition with the Company. The Executive further acknowledges that
the Company would not enter into this Agreement and undertake the substantial
obligations under this Agreement without the Executive's agreement to the
following provisions of this Section 7:
(a) During the Restricted Period (as defined below) he will not,
directly or indirectly, as an officer, director, stockholder, partner,
associate, employee, consultant, owner, agent, co-venturer or otherwise, become
or be interested in or be associated with any other corporation, firm or
business engaged in the manufacture, marketing or sale of products which compete
directly with products of the Company. The Executive's ownership, directly or
indirectly, of not more than three percent (3%) of the issued and outstanding
stock of any corporation or other entity, the shares of which are traded on a
national securities exchange or the Nasdaq Stock Market, shall not in any event
be deemed to be a violation of the provisions of this Section 7(a).
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(b) During the Restricted Period, the Executive shall not call upon,
solicit, divert or take away, or attempt to call upon, solicit, divert or take
away, business of a type the same or similar to the business as conducted by the
Company prior to the date of termination of the Executive's employment with the
Company from any of the Customers of the Company upon whom he called or whom he
solicited or to whom he catered or with whom he became acquainted after entering
the employ of the Company.
(c) The Executive acknowledges and agrees that during the time of his
employment with the Company, he will gain valuable information about the
identity, qualifications and ongoing performance of the employees of the
Company. During the one-year period after the termination of the Executive's
employment with the Company for any reason, the Executive shall not (i) hire,
employ, offer employment to, or seek to hire, employ or offer employment to, any
of the Company's senior level employees with whom he had contact prior to such
termination of employment or (ii) solicit or encourage any such senior level
employee to seek or accept employment with any other person or entity.
(d) The Executive represents and warrants that the knowledge, skills
and abilities he currently possesses are sufficient to permit him, in the event
of his termination of employment hereunder for any reason, to earn a livelihood
satisfactory to himself without violating any provision of this Agreement.
(e) For the purposes of this Section 7, "RESTRICTED PERIOD" shall mean
the period beginning on the date hereof and ending with:
(i) in the case of a termination of the Executive's employment
pursuant to Section 5(c) above, or in the case the Executive terminates his
employment other than pursuant to (x) a Constructive Termination Without Cause
or (y) pursuant to Section 5(e), the first anniversary of such termination;
(ii) in the case of a termination of the Executive's employment
pursuant to Section 5(d) above, the end of the Severance Period; and
(iii) in the case of a termination of the Executive's employment
pursuant to Section 4(e) above, the date of such termination; PROVIDED, HOWEVER,
that within 10 days after the Executive announces that he will not renew his
employment hereunder at the end of the then current Term of Employment the
Company may notify the Executive that it will cause the Restriction Period to be
twelve (12) months and, in consideration for such period, the Company will pay
to the Executive the amounts specified in Section 5(e) above plus the following:
(A) continued participation in all medical and dental plans
at the same benefit level at which he was participating on the
date of the termination of his employment until the earlier of:
a. the end of the Restriction Period; or
b. the date, or dates, he received equivalent coverage and
benefits under the plans and programs of a subsequent
employer (such coverage and benefits to be determined
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on a coverage-by-coverage, or benefit-by-benefit,
basis);
provided that (x) if the Executive is
precluded from continuing his participation in any
employee benefit plan or program as provided in this
clause (iii) of this Section 5(e), he shall receive
cash payments equal on an after-tax basis to the cost
to him of obtaining the benefits provided under the
plan or program in which he is unable to participate
for the period specified in this clause (iii) of this
Section 5(e), (y) such cost shall be deemed to be the
lowest cost that would be incurred by the Executive
in obtaining such benefit himself on an individual
basis, and (z) payment of such amounts shall be made
quarterly in advance; and
(B) Base Salary, at the annualized rate in effect on the date of
the Company's notice, through the end of the Restriction Period,
payable in accordance with the Company's standard payroll practices.
] or
8. REMEDIES
In addition to whatever other rights and remedies the Company may have
at equity or in law, if the Executive breaches any of the provisions contain in
Sections 6 or 7 above, the Company (a) shall have the right to immediately
terminate all payments and benefits due under this Agreement and (b) shall have
the right to seek injunctive relief. The Executive acknowledges that such a
breach would cause irreparable injury and that money damages would not provide
an adequate remedy for the Company.
9. RESOLUTION OF DISPUTES
Any disputes arising under or in connection with this Agreement shall
be resolved by binding arbitration, to be held in Washington, DC in accordance
with the rules and procedures of the American Arbitration Association, except
that disputes arising under or in connection with Sections 6 and 7 above shall
be submitted to a court of appropriate jurisdiction. Judgment upon the award
rendered by the arbitrators) may be entered in any court having jurisdiction
thereof. Each party shall bear his or its own costs of the arbitration or
litigation, including, without limitation, attorneys' fees. Pending the
resolution of any arbitration or court proceeding, the Company shall continue
payment of all amounts and benefits due the Executive under this Agreement.
10. INDEMNIFICATION
(a) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "PROCEEDING"), by reason of the
fact that he is or was a director, officer or employee of the Company or any
subsidiary or is or was serving at the request of the Company or any subsidiary
as a director, officer, member, employee or agent of another corporation,
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partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is the Executive's alleged action in an official capacity while serving as a
director, officer, member, employee or agent, the Executive shall be indemnified
and held harmless by the Company to the fullest extent legally permitted or
authorized by the Company's certificate of incorporation or bylaws or
resolutions of the Company's certificate of incorporation or by laws or
resolutions of the Company's Board of Directors or, if greater, by the laws of
the State of Delaware, against all cost, expense, liability and loss (including,
without limitation, attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by the Executive in connection therewith, and such indemnification
shall continue as to the Executive even if he has ceased to be a director,
member, officer, employee or agent of the Company or other entity and shall
inure to the benefit of the Executive's heirs, executors and administrators. The
Company shall advance to the Executive all reasonable costs and expenses
incurred by him in connection with a Proceeding within 20 days after receipt by
the Company of a written request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses.
(b) Neither the failure of the Company (including its board of
directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive under Section 10(a) above that indemnification
of the Executive is proper because he has met the applicable standard of
conduct, nor a determination by the Company (including its board of directors,
independent legal counsel or stockholders) that the Executive has not met such
applicable standard of conduct, shall create a presumption that the Executive
has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors and
officers' liability insurance policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.
11. EFFECT OF AGREEMENT ON OTHER BENEFITS
Except as specifically provided in this Agreement, the existence of
this Agreement shall not be interpreted to preclude, prohibit or restrict the
Executive's participation in any other employee benefit or other plans or
programs in which he currently participates.
12. ASSIGNABILITY; BINDING NATURE
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and permitted assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such rights
or obligations may be assigned or transferred in connection with the sale or
transfer of all or substantially all of the assets of the Company, provided that
the assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law. The Company further agrees that, in the
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event of a sale or transfer of assets as described in the preceding sentence, it
shall take whatever action it legally can in order to cause such assignee or
transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder. No fights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits, which may be transferred only by will or operation
of law, except as provided in Section 18 below.
13. WARRANTY OF EXECUTIVE
As an inducement to the Company to enter into this Agreement, the
Executive represents and warrants that he is not a party to any other agreement
or obligation for personal services, and that there exists no impediment or
restraint, contractual or otherwise, on his power, right or ability to enter
into this Agreement and to perform his duties and obligations hereunder.
14. COMPANY REPRESENTATIONS
The Company represents to the Executive that this Agreement has been
duly authorized, executed and delivered by the Company and is a legal, valid and
binding obligation of the Company and that the execution, delivery and
performance of this Agreement by the Company will not breach or be in conflict
with any agreements to which the Company is a party or by which it is bound.
15. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement between
the parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.
16. AMENDMENTS; WAIVERS
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be. No failure to exercise and no delay in exercising any right, remedy or power
hereunder shall preclude any other or further exercise of any other right,
remedy or power provided herein or by law or in equity.
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17. SEVERABILITY OF PROVISIONS
In the event that any provision or any portion thereof should ever be
adjudicated by a court of competent jurisdiction to exceed the time or other
limitations permitted by applicable law, as determined by such court in such
action, then such provisions shall be deemed reformed to the maximum time or
other limitations permitted by applicable law, the parties hereby acknowledging
their desire that in such event such action be taken. In addition to the above,
the provisions of this Agreement are severable, and the invalidity or
unenforceability of any provision or provisions of this Agreement or portions
thereof shall not affect the validity or enforceability of any other provision,
or portion of this Agreement, which shall remain in full force and effect as if
executed with the unenforceable or invalid provision or portion thereof
eliminated. Notwithstanding the foregoing, the parties hereto affirmatively
represent, acknowledge and agree that it is their intention that this Agreement
and each of its provisions are enforceable in accordance with their terms and
expressly agree not to challenge the validity or enforceability of this
Agreement or any of its provisions, or portions or aspects thereof, in the
future. The parties hereto are expressly relying upon this representation,
acknowledgment and agreement in determining to enter into this Agreement.
18. BENEFICIARIES/REFERENCES
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's death
or a judicial determination of his incompetence, reference in this Agreement to
the Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.
19. GOVERNING LAW
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Virginia without reference to
principles of conflict of laws. The parties hereby irrevocably consent to the
service of any and all process in any action or proceeding arising out of or
relating to this Agreement by the mailing of copies of such process to the
parties at the address specified in Section 20 hereof.
20. NOTICES
All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method upon receipt of telephonic or electronic confirmation; the day after it
is sent, if sent for next day delivery to a domestic address by a recognized
overnight delivery service (e.g., Federal Express); and upon receipt, if sent by
certified or registered mail, return receipt requested. In each case notice
shall be sent to the Company c/o the Board of Directors at the Company's
principal executive offices and to the Executive at his last known permanent
address, or to such other place as either party may designate as to itself or
himself by written notice to the other.
21. HEADINGS
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
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22. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
NX NETWORKS, INC.
By:______________________________________
Title:___________________________________
_________________________________________
Xxxx XxXxxx
