EXHIBIT 10.24
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "Agreement") is made as
of June 7, 1999, but is effective as of the Executive's Start Date (as defined
in Section 1 below), between ▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇ ▇. READ ("Executive").
The parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive and
Executive accepts such employment for the period beginning as of that date which
is as soon as practicable following Executive's resignation from his current
employment ("Executive's Start Date") hereof and ending on the fourth
anniversary of Executive's Start or upon Executive's earlier separation pursuant
to Section 1(d) hereof (the "Employment Period"); provided, however, that the
Employment Period shall automatically be renewed for an additional two year
period commencing on the fourth anniversary of Executive's Start Date unless
either the Company or the Executive gives the other at least 60 days written
notice prior to the Expiration of the Employment Period of its desire to
terminate this Agreement.
(a) Position and Duties. During the Employment Period,
Executive shall serve as the President and Chief Operating Officer of the
Company and shall have the normal duties, responsibilities and authority of the
President and Chief Operating Officer, subject to the power of the Chairman, the
Chief Executive Officer or the Company's board of directors (the "Board") to
expand or limit such duties, responsibilities and authority and to override
actions of the President and Chief Operating Officer. Executive's office shall
be located at the Company's offices in Northern Virginia and Executive shall
report to the Chief Executive Officer of the Company and Executive shall devote
his best efforts and of his full business time and attention to the business and
affairs of the Company and its Subsidiaries; provided, however, that Executive
shall be permitted (and it shall not be a conflict for him) to serve on the
boards of directors of the two private companies on which he sits as of the
Executive's Start Date. After the first anniversary of Executive's Start Date
and so long thereafter as Executive is employed by the Company, Executive shall
be eligible to be considered for appointment to the Board.
(b) Salary, Bonus and Benefits. The Company will pay Executive
a base salary of $225,000 per annum, subject to any annual increase during the
Employment Period as determined by the Board based upon the Company's
achievements of budgetary and other objectives set by the Board (the "Annual
Base Salary"). In addition, Executive shall be eligible to receive an annual
cash bonus based upon the Company's achievement of budgetary and other
objectives set by the Board; provided, however, that in respect of the first
year of the Employment Period, Executive shall receive an annual bonus of
$125,000, payable as follows:
(i) $50,000 upon execution by the parties of this Agreement, (ii) $25,000 on or
before September 30, 1999; (iii) $25,000 on or before December 31, 1999; and
(iv) $25,000 on the first anniversary of Executive's Start Date; and, provided,
further, however, that during the initial three-year Employment Period,
Executive's aggregate Annual Base Salary plus annual bonus shall not be less
that $350,000 per year. Executive's Annual Base Salary for any partial year will
be prorated based upon the number of days elapsed in such year. Executive shall
be entitled to reimbursement of his reasonable and documented relocation/moving
expenses up to a total of $25,000. In addition, during the Employment Period,
Executive will be entitled to three (3) weeks of vacation plus two (2) personal
and five (5) sick days per year (all with pay), a car allowance of $700 per
month, plus such other benefits approved by the Board and made available to the
Company's senior executives, including tuition reimbursement, reimbursement of
business expenses and healthcare benefits.
(c) Issuance of Stock and Stock Options. Executive shall also
receive options for the purchase of 500,000 shares of the Common Stock in
accordance with the terms of the Company's employee stock option plan. Subject
to paragraph 1(d) below, the options will vest as follows: (i) 100,000 of the
shares will vest upon execution by the parties of this Agreement, (ii) 50,000
options vest on the first anniversary of Executive's Start Date; (iii) 50,000
options will vest on each of the next three anniversary dates of Executive's
Start Date for so long as Executive is employed by the Company; (iv) 50,000
options vest upon the Company's achievement of a certain ratio of cost of access
revenue to access revenue, as defined in the Company's published quarterly
financial statements, for two consecutive quarters, such ratio to be set by
mutual agreement of the Company's Chief Executive Officer and Executive on or
before the 30th day following Executive's Start Date (which agreement shall be
subject to the ratification of the Board or committee thereof, if and as
required on advice of the Company's counsel); (v) 50,000 options vest upon the
Company's achievement of a certain second (and reduced as compared to the ratio
set under clause (iv) above) ratio of cost of access revenue to access revenue
(as defined above) for two consecutive quarters, such ratio to be set by mutual
agreement of the Company's Chief Executive Officer and Executive on or before
the 30th day following Executive's Start Date (which agreement shall be subject
to the ratification of the Board or committee thereof, if and as required on
advice of the Company's counsel); and (vi) 100,000 options vest upon the Board's
adoption of a comprehensive Strategic Telecom Plan including a long-term
Broadband Solution and Existing Network Rationalization Plan; provided, however,
that the performance-based option is provided for under clauses (iv), (v) and
(vi) shall vest in any event upon the seventh anniversary of Executive's Start
Date, regardless of the foregoing vesting provisions. Executive shall have the
discretion to fix the date on which the Company grants the above-referenced
options (which will effectively allow Executive to chose the strike price on
such options) at any time during the first sixty (60) days following Executive's
Start Date; provided, however, that in order for Executive to take advantage of
the foregoing right he shall provide written notice to the Company's Chief
Executive Officer (with a copy
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to the Company's counsel) and the Board or committee thereof shall thereupon
authorize such grant if and as required on advice of the Company's counsel; and
provided, further, however, that if Executive fails to provide such notice
within such time frame, the Company shall grant such options on the 30th day
following Executive's Start Date. So long as Executive is an employee of the
Company, Executive shall be able to purchase shares of stock underlying any of
Executive's vested options at any time for a period of six (6) years from the
date of vesting at the specified price, subject, however, to any shorter period
as may be contained in the Company's employee stock option plan applicable to
such vested options. Executive will be eligible for grants of additional options
during the Employment Period approved by the Board based on Executive's and the
Company's performance. All shares and options issued to Executive shall be made
through stock purchase agreements or options agreements, as appropriate, based
on the Company's standard form for its executives.
(d) Separation. Executive's employment by the Company during
the Employment Period will continue until Executive's resignation at any time or
until Executive's disability or death or until the Board terminates Executive's
Employment at any time during the Employment Period. If the Employment Period is
terminated by the Executive without Good Reason, then the termination will be
effective sixty (60) days after the date of delivery of written notice of
termination. If the Employment Period is terminated by the Board without Cause
or by the Executive with Good Reason, then the termination will be effective
thirty (30) days after the date of delivery of written notice of termination. If
the Employment Period is terminated by the Board with Cause, termination will be
effective as of the date of notice of termination. If the Employment Period is
terminated by the Board with Cause or by the Executive without Good Reason, then
the Executive shall be entitled to receive his Annual Base Salary, bonuses and
his fringe benefits only through the effective date of termination. If the
Employment Period is terminated by the Board without Cause or by the Executive
with Good Reason, then (i) the aggregate 300,000 options issued to the Executive
as of the date hereof under clauses (i), (ii) and (iii) of paragraph (c) above
shall vest immediately and (ii) the Executive shall be entitled to receive his
Annual Base Salary and his life insurance, medical insurance and disability
insurance benefits, if any, (but no bonuses or other fringe benefits) for one
year from the effective date of termination (such payments, the "Severance
Payment") shall be payable over time in accordance with normal payroll
practices. If the Employment Period is terminated due to death, then the Annual
Base Salary and medical insurance will be continued through the next full
calendar month following the month in which the Executive died. If the
Employment Period is terminated due to Disability, then the Annual Base Salary,
medical insurance and disability insurance will be continued until the last day
of the six-month period following Disability; provided, however, that such
Annual Base Salary shall be reduced by the amount of any disability income
payments made to the Executive during such six-month period from any insurance
or other policies provided by the Company.
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2. Confidential Information.
(a) Executive acknowledges that the Company and its
Subsidiaries are engaged in the internet service provider business and related
internet services (the "Business"). Executive further acknowledges that the
Business and its continued success depend upon the use and protection of a large
body of confidential and proprietary information, and that he holds a position
of trust and confidence by virtue of which he necessarily possesses, has access
to and, as a consequence of his signing this Agreement, will continue to possess
and have access to, highly valuable, confidential and proprietary information of
the Company and its Subsidiaries not known to the public in general, and that it
would be improper for him to make use of this information for the benefit of
himself and others. All of such confidential and proprietary information now
existing or to be developed in the future will be referred to in this Agreement
as "Confidential Information." This includes, without specific limitation,
information relating to the nature and operation of the Business or any other
business conducted by the Company's Subsidiaries (the "Subsidiary Business"),
the persons, firms and corporations which are customers or active prospects of
the Company or the Subsidiary Business during Executive's employment by the
Company, the Company's and the Subsidiary Business' development transition and
transformation plans, methodology and methods of doing business, strategic,
acquisition, marketing and expansion plans, including plans regarding planned
and potential acquisitions and sales, financial and business plans, employee
lists, numbers and location of sales representatives, new and existing programs
and services (and those under development), prices and terms, customer service,
integration processes requirements, costs of providing service, support and
equipment and equipment maintenance costs. Confidential Information shall not
include any information that has become generally known to and available for use
by the public other than as a result of Executive's acts or omissions.
(b) Disclosure of any Confidential Information of the Company
shall not be prohibited if such disclosure is directly pursuant to a valid and
existing order of a court or other governmental body or agency within the United
States; provided, however, that (i) Executive shall first have given prompt
notice to the Company of any such possible or prospective order (or proceeding
pursuant to which any such order may result) and (ii) Executive shall afford the
Company a reasonable opportunity to prevent or limit any such disclosure.
(c) During the Employment Period and for a period of five (5)
years thereafter, Executive will preserve and protect as confidential all of the
Confidential Information known to Executive or at any time in Executive's
possession. In addition, during the Employment Period and at all times
thereafter, Executive will not disclose to any unauthorized person or use for
his own account any of such Confidential Information without the Board's written
consent.
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Executive agrees to deliver to the Company at a Separation, or at any other time
the Company may request in writing, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) containing or otherwise
relating to any of the Confidential Information (including, without limitation,
all acquisition prospects, lists and contact information) which he may then
possess or have under his control. Executive acknowledges that all such
memoranda, notes, plans, records, reports and other documents are and at all
times will be and remain the property of the Company.
(d) Executive will fully comply with any agreement reasonably
required by any of the Company's Subsidiaries, business partners, suppliers or
contractors with respect to the protection of the confidential and proprietary
information of such entities.
3. Noncompetition and Nonsolicitation. Executive acknowledges
that in the course of his employment with the Company he will become familiar
with the Confidential Information concerning the Company and such Subsidiaries
and that his services will be of special, unique and extraordinary value to the
Company. Executive agrees that the Company has a protectable interest in the
Confidential Information acquired by Executive during the course of his
employment with the Company. Therefore, Executive agrees that:
(a) Noncompetition. So long as Executive is employed or
affiliated with the Company or any Subsidiary and for an additional one year (1)
thereafter (the "Noncompete Period"), he shall not, anywhere within 100 miles of
any of the Company's and its subsidiaries' offices in the United States,
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in the provision of dial-up and
dedicated Internet access for consumers.
(b) Nonsolicitation. During the Noncompete Period and for an
additional one (1) year thereafter, other than individuals employed in
administrative capacities by the Company whose job skills can be found in other
individuals and who if they left the employment of the Company would not have a
material adverse effect on the Company, the Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its Subsidiaries to leave the employ of the Company or
such Subsidiary, or in any way interfere with the relationship between the
Company or any of its Subsidiaries and any employee thereof, (ii) hire any
person who was an employee of the Company or any of its Subsidiaries within 180
days prior to the time such employee was hired by the Executive, (iii) induce or
attempt to induce any owner of a site location, customer, supplier, licensee or
other business relation of the Company or any of its
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Subsidiaries to cease doing business with the Company or such Subsidiary or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any of its Subsidiaries or (iv)
directly or indirectly acquire or attempt to acquire an interest in any business
relating to the business of the Company or any of its Subsidiaries and with
which, to Executive's knowledge, the Company or any of its Subsidiaries has
entertained discussions or has requested and received information relating to
the acquisition of such business by the Company or any of its Subsidiaries in
the one-year period immediately preceding a Separation.
(c) Enforcement. If, at the time of enforcement of Section 2
or 3 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to Confidential
Information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of Section 2 or Section 3 of this Agreement, the Company or
any of its successors or assigns shall, in addition to other rights and remedies
existing in its favor, be entitled to specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
of Section 2 or Section 3 from any court of competent jurisdiction.
(d) Additional Acknowledgments. Executive acknowledges that
the provisions of this Section are in consideration of: (i) employment with the
Company and (ii) additional good and valuable consideration as set forth in this
Agreement. Executive expressly agrees and acknowledges that the restrictions
contained in Sections 2 and 3 do not preclude Executive from earning a
livelihood, nor does it unreasonably impose limitations on Executive's ability
to earn a living. In addition, Executive agrees and acknowledges that the
potential harm to the Company of its non-enforcement outweighs any harm to the
Executive of its enforcement by injunction or otherwise. Executive acknowledges
that he has carefully read this Agreement and has given careful consideration to
the restraints imposed upon the Executive by this Agreement, and is in full
accord as to their necessity for the reasonable and proper protection of the
Confidential Information. Executive expressly acknowledges and agrees that each
and every restraint imposed by this Agreement is reasonable with respect to
subject matter, time period and geographical area.
4. Representations and Warranties of Executive. Executive
represents and warrants that he has full right and authority to enter into this
Agreement and fully perform his obligations hereunder, that he is not subject to
any non-competition agreement that would prevent or restrict him in any way from
rendering the services hereunder anywhere in the world, and that his past,
present and anticipated future activities have not and will not infringe on the
proprietary rights of others. Executive further represents and warrants that he
is not obligated
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under any contract (including licenses, covenants or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency which would conflict with his obligation to use his best
efforts to promote the interests of the Company or which would conflict with the
Company's business as conducted or proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business as an officer, director or employee by Executive, will conflict with or
result in a breach of the terms, conditions or provisions of or constitute a
default under any contract, covenant or instrument under which Executive is now
obligated.
GENERAL PROVISIONS
5. Definitions.
"Cause" means (i) the commission of a felony or a crime
involving moral turpitude or the intentional commission of any other act or
omission involving dishonesty or fraud with respect to the Company or any of its
Subsidiaries or any of their customers or suppliers, (ii) conduct tending to
bring the Company or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) substantial and repeated failure to perform duties of the
office held by Executive as reasonably directed by the Board not cured within
ten (10) business days after written notice thereof, (iv) gross negligence or
willful misconduct with respect to the Company or any of its Subsidiaries; or
(v) any intentional breach of Section 2 or 3 of this Agreement by Executive not
cured within ten (10) business days after written notice thereof from the
Company. Any election by the Company not to renew the Employment Period on the
fourth anniversary of the date hereof or any renewal thereof shall be deemed to
be a termination by the Company without Cause. The failure of the Company or the
Executive to achieve budgetary or other operational objectives established by
the Board of Directors shall not in and of itself constitute Cause.
"Disability" means a physical or mental condition which, for a
continuous period of at least six (6) months has or will prevent the Executive
from performing his duties on a full time basis and in a professional and
consistent manner. Any dispute as to the Executive's Disability shall be
referred to and resolved by a licensed physician selected and approved by the
Company and the Executive.
"Good Reason" means (i) Executive's resignation within 30 days
after his discovery of any material breach of Section 1 of this Agreement by the
Company which is not cured within ten (10) business days after written notice
thereof from Executive, or (ii) a material reduction of Executive's duties and
responsibilities and/or compensation and benefits which is not cured within
thirty (30) days after written notice thereof from Executive.
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"Person" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Subsidiary" means any corporation of which fifty percent
(50%) or more of the securities having ordinary voting power in electing the
board of directors are, at the time as of which any determination is being made,
owned by the Company either directly or through one or more Subsidiaries. The
term Subsidiary shall also include any joint venture arrangement between the
Company and any other entity.
6. Notices. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by facsimile transmission
or reputable overnight courier service (charges prepaid) to the recipient at the
address below indicated:
If to the Company:
▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇ ▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Executive:
▇▇▇▇▇▇▇ ▇. Read
"Santa ▇▇▇▇▇▇▇"
▇▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under
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this Agreement will be deemed to have been given when so delivered or sent or,
if mailed, five days after deposit in the U.S. mail.
7. General Provisions.
(a) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(c) Counterparts; Facsimile Transmission. This Agreement may
be executed in separate counterparts, each of which is deemed to be an original
and all of which taken together constitute one and the same agreement, and
executed signature pages sent to the other party by facsimile transmission shall
be evidence of a party's intention to be bound hereby.
(d) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive and the Company and their respective successors and assigns.
(e) Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits hereto will be
governed by and construed in accordance with the internal laws of the State of
Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
(f) Remedies. Each of the parties to this Agreement will be
entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including attorney's fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or
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deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(g) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Executive.
(h) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company's principal place of business is located, the
time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
(i) Termination. This Agreement (except for the provisions of
Sections 1(a) and 1(b)) shall survive a Separation and shall remain in full
force and effect after such Separation.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Senior Management Agreement on the date first written above.
▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
/s/ ▇▇▇▇▇▇▇ ▇. Read
------------------------------------------
▇▇▇▇▇▇▇ ▇. Read
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