Exhibit 10.9
SENIOR MANAGEMENT AGREEMENT
---------------------------
THIS SENIOR MANAGEMENT AGREEMENT (this "Agreement") is made as of
---------
March 22, 1999, but is effective as of August 19, 1998, between ▇▇▇▇▇▇▇.▇▇▇,
INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------
("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 the date hereof and
ending on the third anniversary of the date hereof 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 third anniversary of the date
hereof 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 Chairman, Chief Executive Officer and President of the
Company and shall have the normal duties, responsibilities and authority of the
President, 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 shall report to the Chairman 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.
(b) Salary, Bonus and Benefits. The Company will pay Executive a base
--------------------------
salary of $150,000 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
-----------
bonus (commencing with the Company's fiscal year ending December 31, 1999) of up
to $50,000 based upon the Company's achievement of budgetary and other
objectives set by the Board. Executive's Annual Base Salary for any partial
year will be prorated based upon the number of days elapsed in such year. In
addition, during the Employment Period, Executive will be entitled to such other
benefits approved by the Board and made available to the Company's senior
executives, including vacation time, tuition reimbursement, reimbursement of
business expenses, car allowance and healthcare benefits.
(c) Issuance of Stock and Stock Options. Executive shall also receive
-----------------------------------
options for the purchase of 200,000 shares of the Common Stock upon
implementation of the Company's employee stock option plan on the earlier of the
IPO or June 30, 1999. The options will vest as follows: (i) 100,000 of the
shares will vest at the IPO and (ii) 1/4 of the other 100,000 shares (or 25,000
shares) will vest on the first anniversary of the earlier of the IPO or June 30,
2000 and the remaining 3/4 of the other 100,000 shares (or 75,000 shares) shall
vest at the rate of 1/36 per month thereafter (or 2,083.33 shares per month).
All shares shall be fully vested no later than the earlier of the fourth
anniversary of the IPO or June 30, 2003. 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) all shares issued to the Executive as of the date
hereof (i.e., 200,000 shares) 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.
2
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. Executive agrees to deliver to the Company at a Separation, or at any
other time
3
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 two years 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, 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 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
4
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.
GENERAL PROVISIONS
4. 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
5
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 third 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, (ii) the Company has not consummated the IPO by June 30,
1999, or (iii) Executive in his sole discretion and in good faith determines
that he is unable to continue to work with the current chief executive officer,
president, or other senior officer of the Company prior to January 1, 1999.
"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.
5. 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 reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
6
If to the Company:
c/o Unison Partners
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Executive:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇. ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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 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.
6. 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.
7
(c) Counterparts. 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.
(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 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.
* * * * *
8
IN WITNESS WHEREOF, the parties hereto have executed this Senior Management
Agreement on the date first written above.
▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
9