Exhibit 10.24
XXXXXX COMMUNICATIONS, INC.
XXX XXXXXXXXX EMPLOYMENT AGREEMENT
This Agreement is made by and between Xxxxxx Communications,
Inc. (the "Company"), and Xxx Xxxxxxxxx ("Executive") as of September
17, 2001.
1) Duties and Scope of Employment.
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a) Positions; Duties. Commencing upon the date of this Agreement, the
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Company shall employ the Executive as the Executive Chairman of the
Board of the Company reporting to the Board of Directors of the
Company (the "Board"). The period of Executive's employment
hereunder is referred to herein as the "Employment Term." During the
Employment Term, Executive shall render such business and
professional services in the performance of his duties, consistent
with Executive's position within the Company, as shall reasonably be
assigned to him by the Board.
b) Board Position and Duties. Executive shall continue to serve as
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Chairman of the Board of the Company.
2) Employee Benefits. During the Employment Term, Executive shall be eligible
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to participate in the employee and fringe benefit plans maintained by the
Company that are applicable to other senior management to the full extent
provided for under those plans.
3) At-Will Employment. Executive and the Company understand and acknowledge
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that Executive's employment with the Company constitutes "at-will"
employment. Subject to the Company's obligation to provide severance
benefits as specified herein, Executive and the Company acknowledge that
this employment relationship may be terminated at any time, upon written
notice to the other party, with or without good cause or for any or no
cause, at the option either of the Company or Executive.
4) Compensation.
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a) Base Salary.
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i) 2001 Base Salary. During 2001, the Company shall pay the
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Executive as compensation for his services a base salary at the
annualized rate of three hundred sixty thousand dollars
($360,000).
ii) 2002 Base Salary. Commencing in 2002 and while Executive is
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employed by the Company, the Company shall pay the Executive as
compensation for his services a base salary at the annualized
rate of four hundred thousand dollars ($400,000) (together with
the base salary for 2001, the "Base Salary").
iii) Additional Provisions. Executive's Base Salary shall be paid
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periodically in accordance
with normal Company payroll practices and subject to the usual,
required withholding.
b) Bonuses. Executive shall be eligible to earn the following bonus:
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i) 2001 Bonus. Executive shall be eligible to earn a bonus for 2001,
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paid annually based on the following amounts, if applicable:
(1) in the event that the Company's fiscal year 2001 operating
profit reaches 90% of the annual plan target levels currently
in place, then Executive shall be eligible to earn a bonus of
one hundred eighty thousand dollars ($180,000); or
(2) in the event that the Company's fiscal year 2001 operating
profit reaches 100% of the annual plan target levels currently
in place, then Executive shall be eligible to earn a bonus of
three hundred sixty thousand dollars ($360,000); or
(3) in the event that the Company's fiscal year 2001 operating
profit reaches 110% of the annual plan target levels currently
in place, then Executive shall be eligible to earn a bonus of
five hundred forty thousand dollars ($540,000); or
(4) in the event that the Company's fiscal year 2001 operating
profit reaches 120% of the annual plan target levels currently
in place, then Executive shall be eligible to earn a bonus of
seven hundred twenty thousand dollars ($720,000); or
(5) in the event that the Company's fiscal year 2001 operating
profit reaches 130% of the annual plan target levels currently
in place, then Executive shall be eligible to earn a bonus of
nine hundred thousand dollars ($900,000).
ii) 2002 Bonus. Executive shall be eligible to earn a bonus for 2002,
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paid annually based on the following amounts, if applicable:
(1) in the event that the Company's fiscal year 2002 revenue,
earnings per share and [insert balance sheet metric] reach 90%
of the annual plan target levels, as developed by the Board
working with the Executive, then Executive shall be eligible
to earn a bonus of two hundred thousand dollars ($200,000);
(2) in the event that the Company's fiscal year 2002 revenue,
earnings per share and [insert balance sheet metric] reach
110% of the annual plan target levels, as developed by the
Board working with the Executive, then Executive shall be
eligible to earn a bonus of an additional two hundred thousand
dollars ($200,000);
(3) in the event that the Company's fiscal year 2002 revenue,
earnings per share and [insert balance sheet metric] reach
125% of the annual plan target levels, as developed by the
Board working with the Executive, then Executive shall be
eligible to earn a bonus of an additional two hundred thousand
dollars ($200,000); and
(4) in the event that the Company's fiscal year 2002 revenue,
earnings per share and [insert balance sheet metric] reach
130% of the annual plan target levels, as developed
by the Board working with the Executive, then Executive shall
be eligible to earn a bonus of an additional two hundred
thousand dollars ($200,000).
Notwithstanding the foregoing, the Company's obligation to
make any bonus payment, whether during the first or any
subsequent annual period, shall be dependent upon Executive's
employment with the Company through the end of such year.
c) Equity Compensation. After the date of this Agreement, Executive
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shall be granted a stock option (the "Stock Option") to purchase a
total of five hundred thousand (500,000) shares of Company common
stock with a per share exercise price equal to the fair market value
of the Company's common stock on the date of grant. The Stock Option
shall be for a term of ten (10) years (or shorter upon termination
of employment relationship with the Company) and, subject to
accelerated vesting as set forth elsewhere herein, shall vest as
follows: twenty-five percent (25%) of the shares subject to the
Stock Option shall vest twelve (12) months after the Employment
Commencement Date and one forty-eighth (1/48th) of the shares
subject to the Option shall vest each month thereafter at the end of
the month, so as to be one hundred percent (100%) vested on the four
(4) year anniversary of the Employment Commencement Date,
conditioned upon Executive's continued employment with the Company
as of each vesting date. Except as specified otherwise herein, the
option grant shall be pursuant to the terms, definitions and
provisions of the Company's standard form of stock option agreement
(the "Option Agreement"), which agreement is incorporated herein by
reference.
d) Severance.
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i) Involuntary Termination Other Than for Cause; Constructive
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Termination Prior to Change of Control. If, prior to a Change of
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Control, Executive's employment with the Company is
Constructively Terminated or involuntarily terminated by the
Company other than for (x) Cause, (y) Executive's death, or (z)
Executive's Disability, then, subject to Executive executing and
not revoking a standard form of mutual release of claims with the
Company, (A) Executive's Stock Option shall have its vesting
accelerated to receive an additional twelve (12) months of
vesting; (B) Executive shall receive continued payments of one
year's Base Salary plus the pro rata portion of the bonus earned
by Executive in the time employed during such year, less
applicable withholding, in accordance with the Company's standard
payroll practices; (C) the Company shall pay the group health,
dental and vision plan continuation coverage premiums for
Executive and his covered dependents under Title X of the
Consolidated Budget Reconciliation Act of 1985, as amended
("COBRA"), through the lesser of (x) twelve (12) months from the
date of Executive's termination of employment, or (y) the date
upon which Executive and his covered dependents are covered by
similar plans of Executive's new employer; and (D) the Company
shall provide Executive with all other Company welfare plan and
fringe benefits in which Executive participated prior to his
termination through the lesser of (x) twelve (12) months from the
date of Executive's termination of employment, or (y) the date
upon which Executive and his covered dependents are covered by
similar plans of Executive's new employer, and if Executive is
ineligible to participate in one or more of such benefit plans or
programs of the Company, the Company shall provide Executive with
such benefits on an equivalent basis, including a Tax Gross-Up to
the
extent such benefits constitute taxable income to the Executive but
were provided to Executive on a non-taxable basis while Executive
was employed by the Company.
ii) Involuntary Termination Other Than for Cause; Constructive
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Termination On or Following Change of Control. If, on or within the
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six (6) month period immediately following a Change of Control,
Executive's employment with the Company is Constructively
Terminated or involuntarily terminated by the Company other than
for (x) Cause, (y) Executive's death, or (z) Executive's
Disability, then, subject to Executive executing and not revoking a
standard form of mutual release of claims with the Company, (A)
Executive's Stock Option shall have its vesting accelerated such
that 100% of the shares underlying such Stock Option shall vest;
(B) Executive shall receive continued payments of one year's Base
Salary plus the pro rata portion of the bonus earned by Executive
in the time employed during such year, less applicable withholding,
in accordance with the Company's standard payroll practices; (C)
the Company shall pay the group health, dental and vision plan
continuation coverage premiums for Executive and his covered
dependents under COBRA through the lesser of (x) twelve (12) months
from the date of Executive's termination of employment, or (y) the
date upon which Executive and his covered dependents are covered by
similar plans of Executive's new employer; and (D) the Company
shall provide Executive with all other Company welfare plan and
fringe benefits in which Executive participated prior to his
termination through the lesser of (x) twelve (12) months from the
date of Executive's termination of employment, or (y) the date upon
which Executive and his covered dependents are covered by similar
plans of Executive's new employer, and if Executive is ineligible
to participate in one or more of such benefit plans or programs of
the Company, the Company shall provide Executive with such benefits
on an equivalent basis, including a Tax Gross-Up to the extent such
benefits constitute taxable income to the Executive but were
provided to Executive on a non-taxable basis while Executive was
employed by the Company.
For the purposes of this Agreement, "Cause" means (1) material act
of dishonesty made by Executive in connection with Executive's
responsibilities as an employee, (2) Executive's conviction of, or
plea of nolo contendere to, a felony, (3) Executive's gross
misconduct in connection with the performance of his duties
hereunder, or (4) Executive's material breach of his obligations
under this Agreement; provided, however, that with respect to
clauses (3) and (4), such actions shall not constitute Cause if
they are cured by Executive within thirty (30) days following
delivery to Executive of a written explanation specifying the
basis for the Board's beliefs with respect to such clauses.
For the purposes of this Agreement, "Change of Control" is defined
as:
(1) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended) becomes
the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting
power represented by the Company's then outstanding voting
securities; or
(2) The consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or
(3) The consummation of the sale by the Company of all or
substantially all of the Company's assets.
For the purposes of this Agreement, "Constructive Termination"
means (1) a material reduction in Executive's Base Salary or
bonus level, (2) a reduction in Executive's title or a
material reduction in Executive's authority or duties, or (3)
the requirement that Executive relocate more than fifty (50)
miles from the current Company headquarters.
For the purposes of this Agreement, "Disability" shall mean
Executive's mental or physical impairment which has or is
likely to prevent Executive from performing the
responsibilities and duties of his position for three (3)
months or more in the aggregate during any six (6) month
period. Any question as to the existence or extent of
Executive's disability upon which the Executive and the
Company cannot agree shall be resolved by a qualified
independent physician who is an acknowledged expert in the
area of the mental or physical impairment, selected in good
faith by the Board and approved by the Executive, which
approval shall not unreasonably be withheld.
The Executive shall not be required to mitigate the value of
any severance benefits contemplated by this Agreement, nor
shall any such benefits be reduced by any earnings or benefits
that the Executive may receive from any other source.
iii) Voluntary Termination; Involuntary Termination for Cause. Except
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as otherwise specified herein, in the event Executive terminates
his employment voluntarily or is involuntarily terminated by the
Company for Cause, then all vesting of the Stock Option, and any
other equity compensation shall terminate immediately and all
payments of compensation by the Company to Executive hereunder
shall immediately terminate (except as to amounts already earned).
5) Assignment. This Agreement shall be binding upon and inure to the benefit
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of (a) the heirs, beneficiaries, executors and legal representatives of
Executive upon Executive's death and (b) any successor of the Company. Any
such successor of the Company shall be deemed
substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" shall include any person, firm,
corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the
rights of Executive to receive any form of compensation payable pursuant to
this Agreement shall be assignable or transferable except through a
testamentary disposition or by the laws of descent and distribution upon
the death of Executive. Any attempted assignment, transfer, conveyance or
other disposition (other than as aforesaid) of any interest in the rights
of Executive to receive any form of compensation hereunder shall be null
and void.
6) Notices. All notices, requests, demands and other communications called for
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hereunder shall be in writing and shall be deemed given if (i) delivered
personally or by facsimile, (ii) one (1) day after being sent by Federal
Express or a similar commercial overnight service, or (iii) three (3) days
after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors in
interest at the following addresses, or at such other addresses as the
parties may designate by written notice in the manner aforesaid:
If to the Company: Xxxxxx Communications, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
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If to Executive: Xxx Xxxxxxxxx
at the last residential address
known by the Company.
7) Severability. In the event that any provision hereof becomes or is declared
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by a court of competent jurisdiction to be illegal, unenforceable or void,
this Agreement shall continue in full force and effect without said
provision.
8) Proprietary Information Agreement. Executive agrees to enter into the
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Company's standard Employment, Confidential Information and Invention
Assignment Agreement (the "Proprietary Information Agreement") upon
commencing employment hereunder, as modified so as not to conflict with the
provisions of this Agreement.
9) Entire Agreement. This Agreement, the Stock Plan, the Option Agreement,
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the employee benefit plans referred to in Section 2 and the Proprietary
Information Agreement represent the entire agreement and understanding
between the Company and Executive concerning Executive's employment
relationship with the Company, and supersede and replace any and all prior
agreements and understandings concerning Executive's employment
relationship with the Company.
10) Non-Binding Mediation, Arbitration and Equitable Relief.
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a) The parties agree to make a good faith attempt to resolve any dispute
or claim arising out of or related to this Agreement through
negotiation. In the event that any dispute or claim arising out of or
related to this Agreement is not settled by the parties hereto, the
parties will attempt in good faith to resolve such dispute or claim by
non-binding mediation in Santa
Xxxxx County, California to be conducted by one mediator belonging to
the American Arbitration Association. The mediation shall be held
within thirty (30) days of the request therefor. The costs of the
mediation shall be borne equally by the parties to the mediation.
b) Executive and the Company agree that, to the extent permitted by law,
any dispute or controversy arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof which has not
been resolved by negotiation or mediation as set forth in Section 10(a)
shall be finally settled by binding arbitration to be conducted by one
arbitrator in Santa Barbara, California in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association (the "Rules"). The arbitrator may
grant injunctions or other relief in such dispute or controversy. The
decision of the arbitrator shall be confidential, final, conclusive and
binding on the parties to the arbitration. Judgment may be entered
under a protective order on the arbitrator's decision in any court
having jurisdiction.
c) The arbitrator shall apply California law to the merits of any dispute
or claim, without reference to rules of conflict of law. The
arbitration proceedings shall be governed by federal arbitration law
and by the Rules, without reference to state arbitration law. Executive
hereby expressly consents to the personal jurisdiction of the state and
federal courts located in California for any action or proceeding
arising from or relating to this Agreement and/or relating to any
arbitration in which the parties are participants.
d) Executive understands that nothing in Section 10 modifies Executive's
at-will status. Either the Company or Executive can terminate the
employment relationship at any time, with or without cause.
e) EXECUTIVE HAS READ AND UNDERSTANDS SECTION 10, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES, TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS
AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH, OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY
TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EXECUTIVE RELATIONSHIP, INCLUDING BUT NOT
LIMITED TO, THE FOLLOWING CLAIMS:
i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF
CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD
FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR
INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION.
ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL
STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE
CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION
201, et seq;
iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS
RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
11) No Oral Modification, Cancellation or Discharge.
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This Agreement may only be amended, canceled or discharged in writing
signed by Executive and the Chief Executive Officer of the Company.
12) Withholding. The Company shall be entitled to withhold, or cause to be
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withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.
13) Governing Law. This Agreement shall be governed by the laws of the State
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of California without reference to rules relating to conflict of law.
14) Acknowledgment. Executive acknowledges that he has had the opportunity to
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discuss this matter with and obtain advice from his private attorney, has
had sufficient time to, and has carefully read and fully understands all
the provisions of this Agreement, and is knowingly and voluntarily entering
into this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement:
XXXXXX COMMUNICATIONS, INC.
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
President and Chief Executive Officer
EXECUTIVE
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
