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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 31
day of July, 1996, by Xxxxxx Communications, L. P., a Delaware limited
partnership with its principal place of business at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000 (the "Partnership"); Xxxxxx Communications, Inc., a
Delaware corporation, having the same principal place of business and having
been formed to succeed to the businesses of the Partnership by becoming a
holding company of the Partnership (the "Corporation"); and Xxxxx Xxxxxxx
residing at 00 Xxxxxxx Xxxx, Xxxxxxx Xxxxx, XX 00000 (the "Executive"). The
Partnership and the Corporation shall be referred to herein as the "Employer."
WHEREAS, the parties wish to set forth the terms and
conditions upon which the Employer will employ the Executive;
NOW THEREFORE, 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:
1. Term of Employment; Title; Duties.
The Employer hereby employs the Executive, and the Executive
hereby accepts employment with the Employer, upon the terms set forth in this
Agreement. The Executive shall serve as the President of Direct Sales during
the term of his employment under this Agreement. The Executive shall report
directly to the Chairman and Chief Executive Officer, who shall have the
authority to direct, control and supervise the activities of the Executive.
The Executive shall perform such services consistent with his position as may
be assigned to him from time to time by such person.
2. Extent of Services.
The Executive agrees to devote his entire business time and
attention to the performance of his duties under this Agreement. He shall
perform his duties to the best of his ability and shall use his best efforts to
further the interests of the Employer. The Executive shall work at the
principal office of the Employer located in the Washington, D.C. metropolitan
area. The Executive represents and warrants to the Employer that he is able to
enter into this Agreement and that his ability to enter into this Agreement and
to fully perform his duties hereunder are not limited to or restricted by any
agreements or understandings between the Executive and any other person,
including, but not limited to, AT&T Communications, Inc. For the purposes of
this Agreement, the term "person"
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means any natural person, corporation, partnership, limited liability
partnership, limited liability company, or any other entity of any nature.
3. Base Salary.
The Employer shall pay the Executive a base annual salary of
$300,000.00. The salary shall be payable in biweekly installments of
$11,538.46, minus such deductions as may be required by law or reasonably
requested by the Executive. The Employer will review the Executive's base
salary no less often than annually in conjunction with its regular review of
executive salaries.
4. Bonus.
The Executive shall be guaranteed a bonus of $100,000 for the
remainder of 1996. Thereafter, the Executive shall be eligible for an annual
bonus of up to $200,000 in each calendar year based on the Executive's success
in reaching or exceeding certain performance objectives as set forth in, or
established in connection with, the annual business plan or budget by the Chief
Executive Officer or the Compensation Committee of the Board of Directors of
the Corporation.
5. Severance.
The Executive is an employee "at will" and may be terminated
by the Employer at any time with or without cause.
If the Executive is terminated by the Employer without cause
at any time, (i) the Executive shall receive from the Employer within ninety
(90) days of the date of his termination a severance payment equal to his
annual base salary at the date of termination minus such deductions as may be
required by law or reasonably requested by the Executive, and (ii) all of the
Executive's non-vested stock options that would have vested as set forth in
Section 6 of this Agreement during the calendar year in which the termination
occurred shall immediately vest as of the date of termination. If the
Executive voluntarily terminates his employment with the Employer or is
terminated for cause, no such severance payment shall be paid and no such stock
options shall vest.
If the Executive is involuntarily terminated in connection
with an acquisition of the Employer, whether through merger, sale of
substantially all of Employer's assets or otherwise, Executive shall receive a
severance payment of $500,000 within thirty (30) days following such
termination.
6. Stock Options.
On the date that the initial public offering of the common
stock of the Corporation (the "IPO") is consummated, the Executive shall be
granted by the
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Corporation two nonqualified stock options for the purchase of 100,000 shares
and 400,000 shares, respectively, for an aggregate of 500,000 shares of the
common stock of the Corporation each with an exercise price equal to the
initial public offering price of the common stock of the Corporation. The
stock option agreement for an award of 100,000 shares shall provide that the
option is fully vested from the date of grant, shall become exercisable six (6)
months from the date of grant, and shall provide that the option shall remain
exercisable through the fourth anniversary of the date of grant whether or not
the Executive's employment with the Employer continues. Accordingly, such
option shall remain exercisable through such fourth anniversary even if
Executive voluntarily terminates his employment with the Employer or is
terminated by the Employer with or without cause. Following such fourth
anniversary, if the Executive continues to be employed by the Employer, such
stock option shall remain exercisable through, and shall terminate on, the
earlier of ninety (90) days following the Executive's termination of employment
or the tenth anniversary of the date of grant.
The stock option agreement for the grant of the 400,000 shares
shall provide that the option shall vest at the rate of twenty-five percent
(25%) per year on each anniversary date of the consummation of the IPO of the
Corporation (subject to partial acceleration as provided in Section 5 of this
Agreement) such that the stock option shall be fully vested on the fourth
anniversary of such date, provided that the Executive continues to be employed
by the Employer. In addition, if Employer is acquired, whether through merger,
sale of substantially all of its assets or otherwise, the unvested portion of
such option shall vest and become exercisable immediately prior to the
acquisition of Employer. Such stock option shall terminate on the earlier of
ninety (90) days following the Executive's termination of employment or the
tenth anniversary of the date of grant.
The Employer shall register the common stock that may be
acquired upon exercise of the options on Form S-8 no later than thirty (30)
days following the initial public offering of the common stock of the
Corporation. The stock options shall be issued under a stock option plan that
complies with the provisions of Rule 16b-3 of the Securities and Exchange
Commission. The stock option agreements may contain such other and further
terms as are not inconsistent with this Agreement or the stock option plan.
7. Fringe Benefits.
(a) The Executive shall be entitled to all benefits generally
available to employees of the Employer. The Employer shall pay for one parking
space permit for the Executive.
(b) The Executive shall be entitled to four (4) weeks of
vacation during each year of employment. Such vacation shall be taken at such
times as the
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Executive and the Chairman and Chief Executive Officer of the Employer shall
agree. The Executive shall be entitled to sick leave and holidays in
accordance with the policy of the Employer as to its executive employees.
(c) For the calendar year 1997 and each calendar year
thereafter, the Executive shall be entitled to reimbursement of up to $8,000 in
financial counseling and tax preparation expenses incurred by the Executive in
such calendar year, upon submission to the Employer of invoices and other
documentation as may reasonably be requested by the Employer.
(d) The Executive shall be entitled for reimbursement for all
costs associated with relocating to the Washington, D.C. metropolitan area,
including temporary living expenses and closing costs (other than real estate
commissions) related to the sale of Executive's current primary residence and
the purchase of a new primary residence in the Washington, D.C. metropolitan
area. In addition, the Executive shall be entitled to reimbursement for up to
$150,000 in the aggregate for real estate commissions paid, and any capital
loss incurred, by the Executive as a result of the sale of the Executive's
current primary residence. The Executive shall be entitled for reimbursement
for such amounts upon submission to the Employer of such documentation as the
Employer may reasonably request.
8. Reimbursement of Business Expenses.
The Employer shall reimburse the Executive in accordance with
Employer's policies for all reasonable out-of-pocket costs incurred or paid by
the Executive in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Executive of documentation, expense statements, vouchers, and/or such other
supporting information as the Employer may reasonably request
9. Automobile Allowance.
The Executive shall receive an automobile allowance of $450.00
per month which shall be paid with and in addition to the Executive's base
salary. The Executive shall not be required to account for the Executive's use
of such allowance.
10. Non-Solicitation and Non-Competition.
(a) The Executive agrees that while the Executive is employed
pursuant to this Agreement and for a period of twelve (12) months following
termination of the Executive's employment by the Employer for any reason (the
"Non-Competition Period"), whether by action of the Executive or the Employer,
the Executive will not, except as otherwise provided herein, engage or
participate, directly or indirectly, as principal, agent, executive, employee,
employer,
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consultant, stockholder, partner or in any other individual capacity
whatsoever, in the conduct or management of, or own any stock or any other
equity investment in or debt of, any business which is competitive with any
business conducted by the Employer.
For the purpose of this Agreement, a business shall be
considered to be competitive with the business of the Employer if such business
is engaged in providing outsourced marketing services or any other business in
which the Employer is engaged at the time of termination of the Executive's
employment; provided, however, that any common carrier providing long-distance
telecommunications services shall not be deemed to be a business competitive
with the Employer. Accordingly, the non-competition provisions of this Section
10(a) shall not apply to such entities and Executive may be employed by, or be
otherwise associated with, any such entity during the Non-Competition Period.
(b) Employees. During the Non-Competition Period, the
Executive will not, for his/her own benefit or for the benefit of any person or
entity other than the Employer, (i) solicit, or assist any person or entity
other than the Employer to solicit, any officer, director, executive or
employee of the Employer to leave his/her employment, (ii) hire or cause to be
hired any present or former officer, director, executive or employee of the
Employer, or (iii) engage any present or former officer, director, executive or
employee of the Employer as a partner, contractor, sub-contractor, employee or
consultant.
(c) Customer and Business Relationships. During the
Non-Competition Period, the Executive will not (i) solicit, or assist any
person or entity other than the Employer to solicit, any person or entity that
is a client of the Employer, or has been a client of the Employer during the
prior twelve months, to purchase outsourced marketing services or any other
products or services the Employer provides to a client, or (ii) interfere with
any of Employer's business relationships.
(d) Reasonableness. The Executive acknowledges that (i) the
markets served by the Employer are national in scope and are not dependent on
the geographic location of the executive personnel or the businesses by which
they are employed; and (ii) the above covenants are manifestly reasonable on
their face, and the parties expressly agree that such restrictions have been
designed to be reasonable and no greater than is required for the protection of
the Employer.
(e) Investment. Nothing in this Agreement shall be deemed to
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other entity which is competitive with the
Employer, provided that such investments (i) are passive investments and
constitute one percent (1%) or less of the outstanding equity securities of
such an entity the equity securities of
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which are traded on a national securities exchange or other public market, and
(ii) are approved by the Employer.
(f) Enforceability of Restrictions. The parties to this
Agreement mutually agree that, in recognition of Employer's dependence on
Executive's experience to carry out its business plan and Executive's senior
and key position in the Employer, the restrictions detailed in Section 10 of
this Agreement are necessary and appropriate to give effect to the intended
relationships of the parties. Executive agrees that because damages arising
from violations of Section 10 of this Agreement are extremely difficult to
quantify with certainty, injunctive relief will be necessary to effect the
intent of such Section. Accordingly, Executive hereby consents to the
imposition of a preliminary or permanent injunction as a remedy to his breach
of Section 10 of this Agreement.
It is the desire and intent of the parties hereto that the
restrictions set forth in Section 10 of this Agreement shall be enforced and
adhered to in every particular, and in the event that any provision, clause or
phrase shall be declared by a court of competent jurisdiction to be judicially
unenforceable either in whole or in part - whether the fault be in duration,
geographic coverage or scope of activities precluded - the parties agree that
they will mutually petition the court to sever or limit the unenforceable
provision so as to retain and effectuate to the greatest extent legally
permissible the intent of the parties as expressed in Section 10 of this
Agreement.
11. Confidential Information.
(a) The Executive shall not (for his own benefit or the
benefit of any person or entity other than the Employer) use or disclose any of
the Employer's trade secrets or other confidential information. The term
"trade secrets or other confidential information" includes, by way of example,
matters of a technical nature, "know-how", computer programs (including
documentation of such programs), research projects, and matters of a business
nature, such as proprietary information about costs, profits, markets, sales,
lists of customers, and other information of a similar nature to the extent not
available to the public, and plans for future development. After termination
of this Agreement, the Executive shall not use or disclose trade secrets or
other confidential information unless such information becomes a part of the
public domain other than through a breach of this Agreement or is disclosed to
the Executive by a third party who is entitled to receive and disclose such
information.
(b) Upon the effective date of notice of the Executive's or
the Employer's election to terminate this Agreement, or at any time upon the
request of the Employer, the Executive (or his heirs or personal
representatives) shall deliver to the Employer all documents and materials
containing trade secrets and confidential information relating to the
Employer's business and all documents, materials and
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other property belonging to the Employer, which in either case are in the
possession or under the control of the Executive (or his heirs or personal
representatives).
(c) All discoveries and works made or conceived by the
Executive during his employment by the Employer, jointly or with others, that
relate to the Employer's activities shall be owned by the Employer. The terms
"discoveries and works" include, by way of example, inventions, computer
programs (including documentation of such programs), technical improvements,
processes, drawings, and works of authorship, including sales materials which
relate to direct sales, telemarketing, wall media products, sampling/comparing
or services. The Executive shall promptly notify and make full disclosure to,
and execute and deliver any documents requested by, the Employer to evidence or
better assure title to such discoveries and works by the Employer, assist the
Employer in obtaining or maintaining for itself at its own expense United
States and foreign patents, copyrights, trade secret protection and other
protection of any and all such discoveries and works, and promptly execute,
whether during his employment or thereafter, all applications or other
endorsements necessary or appropriate to maintain patents and other rights for
the Employer and to protect its title thereto. Any discoveries and works
which, within six months after the termination of the Executive's employment by
the Employer, are made, disclosed, reduced to a tangible or written form or
description, or are reduced to practice by the Executive and which pertain to
work performed by the Executive while with the Employer shall, as between the
Executive and the Employer, be presumed to have been made during the
Executive's employment by the Employer.
12. Enforcement.
The Executive agrees that the Employer's remedies at law for
any breach or threat of breach by him of the provisions of Section 10 and 11
hereof will be inadequate, and that the Employer shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of Section 10
and 11 hereof and to enforce specifically the terms and provisions thereof, in
addition to any other remedy to which the Employer may be entitled at law or
equity.
13. Miscellaneous.
(a) Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit with the United States Postal Service, by registered
or certified mail, postage prepaid, addressed to the other party at the address
shown above, or at such other address or addresses as either party shall
designate to the other in writing from time to time.
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(b) Pronouns. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
(c) Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.
(d) Amendment. This Agreement may be amended or modified only
by a written instrument executed by both the Employer and the Executive.
(e) Governing Law. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of Maryland,
without regard to its conflicts of laws principles.
(f) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns; provided, however, that the obligations of the Executive are
personal and shall not be assigned or delegated by him.
(g) Waiver. No delays or omission by the Employer or the
Executive in exercising any right under this Agreement shall operate as a
waiver of that or any other right. A waiver or consent given by the Employer
or the Executive on any one occasion shall be effective only in that instance
and shall not be construed as a bar or waiver of any right on any other
occasion.
(h) Captions. The captions appearing in this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
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(i) Severability. In case any provision of this Agreement
shall be held by a court with jurisdiction over the parties to this Agreement
to be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
EMPLOYER EXECUTIVE
XXXXXX COMMUNICATIONS, L. P.
By: Xxxxxx Marketing Communications,
Inc., Its General Partner
By: /s/ XXXXXX X. XXXXXX /s/ XXXXX XXXXXXX
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Xxxxxx X. Xxxxxx, President and Xxxxx Xxxxxxx
Chief Executive Officer
XXXXXX COMMUNICATIONS, INC.
By: /s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx, President and
Chief Executive Officer
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